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16 December Forex daily review

Sergiy Zlyvko
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The single currency has failed to pass the zone of sales at 1.3795. Strong November data on industrial production in the U.S. and the statements of the ECB head Mario Draghi contributed to a decrease of EURUSD to 1.3740. GBPUSD closed in the positive area at about 1.6300.

DXY index decreased to 79.90 and it is currently trading at 80.05. We make another attempt to consider DXY restoring to 80.30. AO indicator is at zero. AC and Stochastic look down. For the next 2-3 hours the dollar will remain under pressure.

The euro/dollar rebounded to 1.3800. Bulls returned Friday losses and before the meeting of FOMC they will likely want to check placed orders to sell the euro at 1.3850. News block is tight today, so the volatility in the foreign exchange market will remain high.

On Tuesday we have to analyze the obtained mixed picture. U.S. dollar can be put up as well as down. We put on the fall of the euro against the U.S. dollar and the British pound.

Why is the fall a main scenario? We’re not trying to catch the maximum, well aware that the Euro has a bullish trend. Since yesterday the single currency strengthened against the background of EURGBP cross, today from cross we expect a sharp decline by 40 points (correction). This means the euro/dollar followed by crosscourt should decrease by about 80 points. If cross drops while dollar is strengthening, the depreciation of the EURUSD will be sharp. If not, then the euro will be traded around 1.3755. Rebound occurred from the 1.3800 mark and it is currently trading at 1.3770. The support passes through 1.3740. For sellers, it is desirable to pass this level in the European session. If the cannot pass it, we must prepare to grow to 1.3825.

Currently a resistance level of 1.6325 serves the GBPUSD. Today the sales of the pounds can be difficult. The fact that the cross-rate EURGBP is expected to fall. H4 chart indicates a decline of EURUSD. If we’re not mistaken, in the fall of cross, the pound will be supported. With the growth of the dollar, the single currency will weakened against the dollar stronger than a pound. Level of 1.6280 acts as support. If the dollar will decline throughout the market, the level of 1.6360 will be on gunpoint.

After a strong fall, AUDUSD exchange rate is in a sideways trend. 0.8970 level acts as resistance. At 9.30 GMT AUDUSD was trading at line 0.8945 mark. The main scenario is waiting for AUDUSD fall to 0.8910. The fall below 0.8905 is under the question. It will be depend on the overall market sentiment towards the dollar.

Franc strengthened against the dollar after the single currency. Strong November data on industrial production in the U.S. and the statements of the ECB Mario Draghi helped to rebound from 0.8845 to 0.8885. Current situation fits the emerging model of Double Bottom, so as the main scenario we expect the growth to 0.8915. Bulls need to pass 0.8890.

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