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EURUSD Trading within the Mid-term Upward Trend

12/9/2022 2:14 PM

The EUR/USD pair continues to trade within the framework of a mid-term upward trend: this week the price corrected down to the level of 1.0440, but then resumed growth and regained lost positions.

The expectation of a less significant increase in the US Fed interest rate at the December meeting, which will be held next week, is currently contributing to the price growth. Slowing down the value adjustment from 75.0 percentage points to 50.0 percentage points will put pressure on the US currency and strengthen the position of alternative assets. Nevertheless, the decision of officials may be influenced by the release of November inflation data. Confirmation of the decline in the rate of price growth already demonstrated in October will make a less aggressive tightening of the US Fed's monetary policy inevitable. Otherwise, the regulator may refuse such a decision, and a new increase in inflation, along with a strong labor market, will confirm the need for more serious actions to stabilize the financial situation.

The situation in the European economy remains difficult, but currently the euro is supported by the gross domestic product (GDP) data for Q3 2022. Thus, on a quarterly basis, the indicator grew by 0.3% instead of the expected 0.2%, and on an annual basis – by 2.3% instead of 2.1%. More significant economic growth rates give investors hope that the recession expected at the end of the year will not be as significant as previously expected. It should be noted that JPMorgan Chase & Co. experts predict a decline of only 0.5%.

Technically, the price is close to 1.0620 (Murray level [7/8]), the breakout of which will give the prospect of further growth to the levels of 1.0742 (Murray level [8/8]) and 1.0864 (Murray level [+1/8]). The key for the "bears" is the middle line of the Bollinger Bands around 1.0400, in case of its breakdown, the decline will be able to continue to the area of 1.0253 (Murray level [4/8]) and 1.0131 (Murray level [3/8]), however, this option of movement in the near future is seen as a less likely scenario, since technical indicators signal the continuation of the upward trend: the Bollinger Bands and the Stochastic are directed upwards, the MACD histogram is stable in the positive zone.

Resistance levels: 1.0620, 1.0742, 1.0864. | Support levels: 1.0400, 1.0253, 1.0131.

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