This is nothing new as it is always been a slow week ahead of Christmas. The market volumes drop leaving an opportunity for the scalpers to trade around. Last week was quite a volatile market but as we draw near, we can expect a drop in the activity.
The larger market view is that the U.S. Dollar is to strengthen as the Fed raised the interest rates after a decade. We are looking forward for a strong dollar in the year 2016 but this may not be the case now. As we have mentioned in our previous newsletters, the dollar may drop for the year as investors cash in. But our forecast for the year 2016 remains bullish especially against the Euro's and Sterling.
The yield on Dollar for the current year was exceedingly good and profited all those investors who had baked up the dollar. Though we have had several volatile move this year, yet at the end Dollar has shown some good profits. It is a good opportunity for investors to cash in at the end of the year and strategies their portfolios for the coming year. This may temporarily weaken the U.S. Dollar, we should take this as an opportunity to go long at the lowest support.
We should be looking anywhere from 119.162/118.69 to 116.
The pair is trading within a sloppy channel which is holding strong since the August of this year. We have seen a 5 straight day fall from the time the pair hit the upper resistance within the channel. It is not trading at 1.48957 and is strangled to this level for the last 2 days. Breaking of this minor resistance will quickly move the pair to 1.4721.
Daily RSI is pointing south while the momentum indicators are pointing natural from being bearish last week. This can only be a forecast of the upcoming thin market but the bias remains negative until the next quarter.
EUR/USD is trading below most of the major moving averages on the 1 hour and the 4 hour charts, the only hurdle for the bears is the 50 moving average and below this will push the pair towards 1.08176. However the pair is on a mild raise using the up-swinging channel as its path but this is not going to change the bearish bias for the upcoming year. The slow strength can be on the back of dollar being cashed out.
But if there are any signs of a Risk-Off move in the European equities, then the EURO may strengthen and break the resistance as if a hot knife is to slice through a butter.
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