(Click on image to enlarge)

EUR/USD will be the main focus for the next 48 hours with November PMIs scheduled for Thursday release followed by the German IFO report on Friday. Marginally firmer data is expected for Germany and softer numbers are expected for France but with industrial production and factory orders falling over the past month, we believe the risk is to the downside for the German and Eurozone reports. EUR/USD raced above 1.18 today on the back of a weakening U.S. dollar, less hawkish FOMC minutes and a small uptick in Eurozone confidence. According to Reuters, the ECB has no plans to change its guidance until late 2018, which is consistent with what we’ve heard all along from the central bank. That mattered little however to a currency pair that was driven entirely by the market’s appetite for U.S. dollars. While that will change tomorrow, there’s no doubt that the technical outlook for EUR/USD shifted with today’s break above the 50 and 100-day SMAs though low liquidity and holiday position adjustments make the move questionable. Until EUR/USD breaks above the November 17th high of 1.1822 in a more meaningful way, the bears still have a chance especially with fundamentals on their side.

Technically, the EUR/USD broke out today but its found resistance at the 2nd standard deviation Bollinger Band. Further more, in order for the downtrend to be erased, EUR/USD needs to break the November high of 1.1860.