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EURUSD Moderate Growth During the Asian Session

12/22/2022 11:04 AM

The European currency shows a moderate growth, testing the level of 1.0640 for a breakout. The "bulls" are in no hurry to update new local highs — the nearest peak is at 1.0735 and was tested by the instrument on December 15.

Market activity is gradually declining as investors prepare for the Christmas holidays. Moderate pressure on the positions of the US currency is exerted by expectations of a further decrease in the rate of interest rate increases. In December, the US Federal Reserve raised the figure by 50 basis points, and now the market expects a correction of 25 basis points at the next meeting of the regulator. However, the value will remain high for a long time, as inflation is still well above the target levels.

A similar position is currently taken by the European Central Bank (ECB), which is signaling in favor of further cautious rate hikes. In the EU, unlike the US, the situation is complicated by the fact that the region's economy is close to recession. The European authorities agreed on a price limit for gas of 180 euros per megawatt-hour, which will be effective from February 15. The mechanism will start to work when the cost of the resource on the Dutch TTF hub exceeds the set threshold for three consecutive days. The price ceiling would allow tariffs to be adjusted and protect consumers from skyrocketing prices, somewhat curbing the recession, officials said.

Published on Wednesday, December 21, macroeconomic statistics from Germany provided little support to the euro. Thus, the Consumer Confidence index from Gfk Group for January corrected from -40.1 points to -37.8 points, which turned out to be better than analysts' forecasts by 0.2 points. The US currency, in turn, was again under pressure after the publication of data on Existing Home Sales: in November, the figure fell by 7.7% after falling by 5.9% in the previous month, while analysts expected near-zero dynamics.

Bollinger Bands in D1 chart show moderate growth. The price range expands, freeing a path to new local highs for the "bulls". MACD is declining keeping a weak sell signal (located below the signal line). Stochastic approached the level of "20" and reversed into an ascending plane, reacting to the appearance of "bullish" sentiment this week.

Resistance levels: 1.0657, 1.0700, 1.0747, 1.0800. | Support levels: 1.0600, 1.0550, 1.0500, 1.0450.

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