Current dynamics

The EUR/USD pair is moving in a corrective trend at 1.0568 as a result of the weakening positions of the US dollar.

Investors will be watching inflation reports from the major eurozone countries this week, with the EU headline figure due out at 12:00 GMT 2 today, with the region’s consumer price index expected to rise to 2.3% year-on-year in November, from 2.0%, and the core figure to 2.8%, from 2.7%. Meanwhile, Germany’s has already risen to 2.2%, from 2.0%, and Spain’s to 2.4%, from 1.8%, confirming continued pressure in their economies. While the figure has been held between 1.0% and 2.0%, the European Central Bank (ECB) has been aggressively cutting borrowing costs (from 4.50% to 3.40% in just four months), the pace of adjustment may be slower now that consumer price growth could exceed 2.0%.

The US dollar is trading at 105.80 in USDX: yesterday, trading platforms in the US were closed for the Thanksgiving holiday, and quotes remain under pressure from weak data on the labor market: the number of initial applications for unemployment benefits last week decreased from 215.0 thousand to 213.0 thousand against the forecast of 215.0 thousand, and the total number of applications increased from 1.898 million to 1.907 million against preliminary estimates of 1.910 million, acting as an argument for the US Federal Reserve in the issue of further interest rate reduction. According to the Chicago Mercantile Exchange (CME) FedWatch Tool, such a probability is now estimated at 66.5%.

Support and resistance levels

On the daily chart, the trading instrument is correcting, retreating from the support line of the descending channel 1.6800–1.4000.

Technical indicators maintain the sell signal, not excluding a correction: fast EMAs on the Alligator indicator are below the signal line, narrowing the range of fluctuations, and the AO histogram forms correction bars, rising in the negative zone.

Support levels: 1.0520, 1.0410.

Resistance levels: 1.0590, 1.0680.

Trading scenarios

Long positions can be opened after the price rises and consolidates above 1.0590 with a target of 1.0680. Stop loss is 1.0550. Implementation period: 7 days or more.

Short positions can be opened after the price declines and consolidates below 1.0520 with a target of 1.0410. Stop loss is around 1.0560.