In the last week, the US dollar index dropped from 14 years high in the market. The U.S dollar index is the measure of the overall strength of the green bucks in a basket against six major currency pairs in the world. The EURO start with a nice decent bullish momentum in the last week after breaking the 13 years low in the market. The green bucks have gained immense strength in the global market after the FED hike their interest rate on the basis of 25 points. Most importantly the FED has declared that they are most likely to go three rate hikes in the next year and if they manage to go for at least two rate hike before the month of November then the EURUSD pair will create a historic low in the market. However, traders are thinking that the current strength of the U.S dollar is fading away in the market as the U.S dollar index slipped from its 14 years high in the market.
The next trading week is going to be very quiet since most of the traders are celebrating their Christmas holiday and already booked their profit in the market. There is no major news for the Euro neither for the green bucks. Since the last week ended with a bullish tone in the EURUSD pair traders are expecting some decent bullish correction in the upcoming week. However, most of the leading investors are thinking that the green bucks will lose its strength in the very beginning of the year 2017 and this might create some fresh buying pressure in the EURUSD pair. But if things go in a positive manner for the green bucks the Euro will slip lower against the green bucks in the forex market. On the contrary, a slight weak data will significantly push this pair higher in the market since previously the pair had very hard times trading in such a low level.
Daily chart analysis for the EURUSD pair.
Figure: Technical parameter in the EURUSD pair
After hitting the critical support level at 1.03445 the EURUSD pair has been showing nice sign of bullish recovery in the market. Moreover, there has been a formation of the bullish pin bar at the critical support level at 1.03445 and traders are expecting the price to hit the first critical resistance level at 1.05081.This level is going to create a decent selling pressure in the EURUSD pair however if the pair manages to breach that level then we will see a strong bullish move in the pair towards the next critical resistance level at 1.08645.This level is going to provide a significant amount of selling pressure to the EURUSD pair and the pair will have a lot of difficulty in overcoming this strong resistance level. Professional price action traders will be looking to short this pair at this level with bearish price action confirmation signal. A clear break of that resistance level will lead this pair towards the 100-day daily dynamic resistance level which is at 1.09096.A daily closing of the price above the 100 days daily SMA will confirm the initial bottom formation of this pair at critical support level at 1.03445
Though the tone is slightly bullish for the EURUSD pair for the upcoming week but we will be looking to sell this pair with bearish price action confirmation signal. The selling zone is at the critical resistance level at 1.05101.If the critical resistance level manages to restrict the bullish move of this pair then we will see another retest of the critical support level at 1.03445.This level is going to provide a significant amount of buying pressure to the EURUSD pair but a clear break of the price below that level will bring another sharp drop in the EURUSD pair creating a new historic low in the market.
Weekly chart analysis for the EURUSD pair
Figure: Weekly chart analysis for the EURUSD pair
There has been a critical breakout in the support line in the EURUSD pair. After breaking the critical support level at 1.05986 the pair broke the 13 years low in the market and eventually found some support at 1.03445.This level is going to play a significant role in the next movement of the EURUSD pair since a clear break of the price below that level will bring strong bearish pressure in the market creating a new historic low. However, we are expecting a bullish retracement in the EURUSD pair in the upcoming week and the price will most likely head towards the critical resistance level at 1.05563.This level is going to create strong selling pressure in the market and professional price action traders will look for selling opportunity in the market with bearish price action signal. If the pair manages to break that resistance level we will see a decent rise in the EURUSD pair towards the next weekly resistance level at 1.08420.
Summary: In the last week the U.S dollar index slipped from its 14 years high in the market. Currently, the EURUSD pair has been showing some nice bullish momentum in the market after breaking the 13 years low in the market. Though buying the pair at the current level is extremely tempting but we will also look at the long-term bearish trend. Considering all the parameters we will be looking for selling opportunity in the EURUSD pair near the critical resistance level. The first bearish take profit level for this pair would be the critical support level at 1.03445