Hi dear colleagues!
Amid the empty economic calendar and the lack of other market catalysts, EUR/USD is still trading in a tight range. Before we dive into detailed technical analysis, let me tell you a bit about the information background and market sentiment. On the whole, there are no big changes here. Market sentiment in the currency market is defined as moderately cautious. Investors are playing safe on the back of the new COVID resurgence. They fear that the new Omicron variant could make a dent in the global economy. In the meantime, experts have downgraded forecasts of the global economic growth. Besides, Christmas festivities are overshadowed by the Omicron strain that assured authorities in many countries to re-impose restrictive measures. Nevertheless, such headwinds do not spoil the risk-on mood which sometimes arouses among market participants for a short while.
Today, the report of major importance is certainly the US GDP data which is due at 15:30 GMT. Apart from that, don't miss the US consumer confidence index which will be released at 17:00 GMT.
Daily
As we see on the daily chart, EUR/USD has been trapped in the trading range for a long time. The borders were determined long ago. Meanwhile, the currency pair is sticking to the lower border. The blue Kijun and the red Tenkan lines, which have settled above the key level of 1.1300, are putting pressure on strong resistance at the moment. If the euro bulls manage to hold the price above the Kijun and Tenkan lines as well as above 1.1300, I don't rule out a further climb to the upper border of the trading range at 1.1383. Otherwise, the EUR/USD bears will hurry up to take advantage of the situation to challenge support in the area of 1.1222 - 1.1187. Based on my experience, the technical picture on the daily chart is likely to suggest a decline of the main currency pair. What signals can we spot from the charts with shorter timeframes?
4-hour chart
On the 4-hour chart, it is clearly seen that the blue 50-day simple moving average and the black 89-period exponential moving average are making a strong obstacle to the price growth. In case the bulls make another failed attempt to break a 50-day SMA and 89-period EMA and in case a bearish candlestick pattern appears below this price action, we will have a signal to open short positions. Alternatively, if both moving averages are broken with a true breakout, it would be a good idea to try opening long positions during a retracement with the nearest targets at 1.1350-1.1360. I wouldn't recommend placing distant targets for sell positions as well. We could plan target levels at around support of 1.1225-1.1200.
Good luck in trading!