This updated Forex market analysis for the EUR/USD currency pair as of December 22, 2023, includes the latest changes in currency performance, the weekly correlation with the FGC Dollar Indicator (our proprietary US Dollar Indicator), current trading conditions, and predictive trading ranges. Let us delve into the details.
Trading Performance Following US Close on 12.22.2023
- Percentage Changes:
- Day-Over-Day Change: A slight increase of 0.14% from the previous day.
- Week-Over-Week Change: A modest increase of 0.28% over the past week.
- Month-Over-Month Change: The pair shows a growth of 1.05% over the past month.
- Correlation and Trading Condition:
- Weekly Correlation vs. FGC Dollar Indicator: A strong negative correlation at -0.8896.
- Trading Condition: Now showing ‘Overbought’.
- Key Support/Resistance Levels:
- Lower Extreme: 1.0889
- Lower Level: 1.0933
- Mid-Level: 1.0976
- Upper Level: 1.1020
- Upper Extreme: 1.1063
- Predictive Trading Range Probabilities:
- Upper Range (66.65% Chance): Less Than or Equal to 1.0995
- Mid-Range (23.18% Chance): Less Than or Equal to 1.0944
- Lower Range (6.59% Chance): Less Than or Equal to 1.0911
Forex Trading Analysis
- Gradual Uptrend: Though minor, the day-over-day and week-over-week changes indicate a gradual upward trend for the EUR/USD Forex pair.
- Monthly Perspective: The month-over-month growth helps to support a longer-term upward trend for now.
- Overbought Condition: The new classification as ‘Overbought’ is significant. It suggests that the Forex pair might be trading higher than its usual range, which could lead to a potential market correction or stabilization.
- Trading Strategy Considerations:
- The support and resistance levels suggest that 1.0976 (Mid-Level) might function as a significant pivot point for short-term trading strategies.
- The high probability (66.65%) of moving below 1.0995 indicates that this level could act as a short-term resistance.
- The relatively low probability of the pair dropping below 1.0911 (6.59% chance) suggests strong support around the lower levels.
US Economic Indicators and Analysis
- Core PCE Price Index m/m (Actual: 0.1%, Forecast: 0.2%): This key inflation indicator came in below forecast, suggesting lower inflationary pressures, which could lead to expectations of less aggressive interest rate hikes by the Federal Reserve, which is usually unfavorable for the USD.
- Core Durable Goods Orders m/m (Actual: 0.5%, Forecast: 0.1%): Exceeding expectations shows more robust business investment and economic health. It is a positive signal for the USD.
- Durable Goods Orders m/m (Actual: 5.4%, Forecast: 2.4%): A significant jump, far above forecasts, suggesting robust economic activity. This is typically bullish for the USD.
- New Home Sales (Actual: 590K, Forecast: 689K): Falling short of forecasts could point to weaknesses in the housing market, often seen as unfavorable for the USD.
Conclusion: Given the mixed US economic data and the technical analysis, the EUR/USD pair could experience volatility. The overbought condition of EUR/USD, combined with the potential shifts in market sentiment due to the US economic data, suggests that traders should expect possible fluctuations in the currency pair. While the recent trend favors the Euro, the potential for changes based on economic releases and market perception of US Dollar strength could lead to market adjustments for managing price swing risks. Traders must stay keen in monitoring economic releases and technical signals when making decisions for trading positions.
Risk Disclosure: Trading financial instruments such as but not limited to off-exchange foreign currencies (forex), cryptocurrency (cryptocurrencies), Futures, ETFs, Equities and Indexes contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.
Trade at your Own Risk: Read Full Risk Disclosure @ https://www.franklinglobalcapital.com/disclosure\