E EUR/USD Long Opened At 1.1320, Take Profit At 1.1500

EUR/USD trading strategy

Trading strategy: Long

Open: 1.1320

Take profit: 1.1500

Stop-loss: 1.1230

Analysis: We used yesterday’s EUR/USD drop to open a long position at 1.1320. The EUR/USD is back above 7-day exponential moving average (1.1354) and 23.6% Fibo of September-November fall (1.1357). The target is at 1.1500. In our opinion, Thursday’s ECB statement will not weaken the EUR/USD structure as many bad news have been already priced in and downward revisions to macroeconomic forecasts will not surprise the market.

Macroeconomic overview

U. S. consumer prices were unchanged in November, held back by a sharp decline in the price of gasoline, but underlying inflation pressures remained firm amid rising rents and healthcare costs.

The strength in underlying inflation reported by the Labor Department on Wednesday supports views that the Federal Reserve will raise interest rates at its December 18-19 policy meeting. The U.S. central bank has hiked rates three times this year.

November's flat reading in the CPI, which was the weakest in eight months, followed a 0.3% increase in October. In the 12 months through November, the CPI rose 2.2%, the smallest gain since February, after advancing 2.5% in October.

Excluding the volatile food and energy components, the CPI climbed 0.2%, matching October's gain. That lifted the year-on-year increase in the so-called core CPI to 2.2% from 2.1% in October.

Last month's inflation readings were in line with market expectations.

Despite the firmness in core consumer prices, the overall inflation outlook is benign amid falling oil prices and signs of slowing economic growth both in the United States and overseas.

A report on Tuesday showed producer prices edging up 0.1% in November after accelerating 0.6% in October.

The Fed's preferred inflation measure, the core PCE price index excluding food and energy, increased 1.8% year-on-year in October, the smallest gain since February, after rising 1.9% the prior month. It hit the U.S. central bank's 2% target in March for the first time since April 2012.

1 2
View single page >> |
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.