Weekly Technical Analysis For December 14th to 18th, 2020

All Eyes Will Be On The Fed Rate Decision This Week

EUR/USD:

Last week, ECB left rates unchanged, expands PEPP by €500 billion to end-March 2022.

ECB increased PEPP program by EUR500 billion to EUR1.85 trillion.  Extends PEPP horizon to March 2022, PEPP reinvestment until the end of 2023, and extends TLTRO3 terms to June 2022.

ECB's Lagarde said that Euro appreciation is important, adds that it puts downward pressure on prices, and will very carefully monitor FX rate. The depth and duration of the second coronavirus wave is bigger than expected. Q4 GDP growth seen at -2.2%. We have good reason to believe that by the end of 2021 we will have reached sufficient herd immunity, she added.

Additionally, the US CPI data were released last Thursday, showing a slightly larger-than-expected increase in consumer prices in November. Prices rose 0.2% on the month rather than the 0.1% expected, although the annual rate of inflation remained at 1.6%.

Looking ahead, pay attention to the Fed Monetary Policy Meeting this week. The meeting will give markets new guidance about how it plans to combat the economic fallout from the coronavirus.

In the previous meeting, the Federal Reserve left its benchmark rate unchanged in the range of 0% to 0.25% and said it would keep rates within the current range until the economy has moved on from the Covid-19 crisis and is on track to meet the central bank's targets. Watch out this week's rate decision, the market will also respond to Chairman Jerome Powell’s comments at his press conference.

Moreover, focus on the Consumer Price Index in the Eurozone. On a year-on-year basis, the Eurozone CPI is expected to be -0.3%. A lower than expected reading will be negative for the single currency.

We are closely watching the 1.2046 main support level in the EURUSD pair. As long as the pair stays above 1.2046, on a daily basis, we will see 1.2214 as a resistance level. On the downside, if the price drops below 1.2046, we will follow the next support level at 1.1819.

Support : 1.2046 - 1.1819 - 1.1744 

Resistance : 1.2214 - 1.2391 - 1.2536

GBP/USD:

Brexit talks entered overtime on Sunday, with a chaotic no-deal exit for Britain from the European Union when the transition period ends on Dec. 31 looking increasingly likely.

In the upcoming week, we will closely watch the BoE Rate Decision. The Bank of England looks likely to leave monetary policy unchanged after its meeting on Thursday.

The GBPUSD pair closed last week below the main resistance level of 1.3231. If the pair stays below 1.3231, the downward movement may gain more momentum, we will see 1.3136 and 1.3046 as support levels. Otherwise, if the price rises above 1.3231, the next resistance level can be seen at 1.3313

Support: 1.3136 - 1.3046 - 1.2992

Resistance: 1.3231 - 1.3313 - 1.3393

EUR/JPY:

The EURJPY pair closed last week above the 125.85 main support level. As long as the price stays above 125.85, on a four hourly basis, we will follow the key resistance level at 126.69. On the downside, if the pair drops below 125.85, the next major support level will be at 125.07

Support: 125.85 - 125.07 - 124.24

Resistance: 126.69 - 127.52 - 128.39

GOLD:

Keep your eye on the 1829 main level in the Gold Price. As long as the price stays above 1829, on a four hourly basis, we will see the daily resistance level 1854 again. On the downside, if the price breaks down below 1829, the next support level will be at 1805.

Support: 1829 - 1805 - 1785

Resistance: 1854 - 1873 - 1904

13 Dec 20 (Sun)

08:05 pm


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