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It is a quiet day for the EUR/USD on the economic calendar. Industrial sales figures for Italy are due out early in the European session. However, barring another sharp decline, the numbers should have a muted impact on the EUR/USD.
This week, German economic indicators showed a possible shift in the economic environment, with business and consumer sentiment improving at the end of the year. A softer inflation backdrop would also allow the ECB to take a less aggressive interest rate path that would support a pickup in consumption.
However, monetary policy divergence remains in favor of the dollar, leaving the upside for the EUR/USD limited.
With the holidays approaching, ECB member commentary would move the dial as investors digest the latest round of stats and possible influence on the ECB. However, no ECB members are speaking today, leaving the markets to monitor chatter with the media.
EUR/USD Price Action
At the time of writing, the EUR was up 0.02% to $1.06074. A mixed start to the day saw the EUR/USD rise to an early high of $1.06113 before easing back.
Technical Indicators
The EUR/USD needs to move through the $1.0613 pivot to target the First Major Resistance Level (R1) at $1.0637 and the Wednesday high of $1.06452. Better-than-expected industrial sales figures would provide support ahead of the US session.
In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.0668 and resistance at $1.07. The Third Major Resistance Level (R3) sits at $1.0723.
Failure to move through the pivot would leave the First Major Support Level (S1) at $1.0582 into play. However, barring a risk-off-fueled sell-off, the EUR/USD pair should avoid sub-$1.0550. The Second Major Support Level (S2) at $1.0558 should limit the downside.
The third Major Support Level (S3) sits at $1.0503.
Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 50-day EMA ($1.05963). The 50-day EMA moved away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.
A hold above the 50-day EMA ($1.05963) would support a breakout from R1 ($1.0637) to target R2 ($1.0668) and $1.07. However, a fall through the 50-day EMA ($1.05963) would support a fall through S1 ($1.0582) to bring S2 ($1.0558) into view. The 200-day EMA sits at $1.04089.
The US Session
It is a busy day ahead, with the weekly jobless claims and finalized Q3 GDP numbers for the markets to consider. With the Fed planning on keeping its foot on the gas, a sharp increase in jobless claims could deliver monetary policy uncertainty.
The markets will also need to consider FOMC member chatter, which could have more impact than the stats.
This article was originally posted on FX Empire
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