EUR/USD dives in to a key resistance


Euro,American dollar and EUR/USD trending points

  • Yesterday, the 19thof December brought forth the fourth-rate hike of this year, however, in the wake of a reduced rate hike in 2019, the EUR/USD rally gathered pace.
  • EUR/USD has been trading at six weeks high, after softening of American dollar
  • Followed by the announcement of downsized rate hike next year, the USD had been drained in to fresh monthly lows, in to 95.84.

EUR/USD rally begins, as USD faltered in to a fresh monthly low

The Wednesday’s, 19thof December, had been a crucial pivot point for both the equities and currencies. Followed by the announcement of a downsized rate hike next year, the market reacted instantly the EUR/USD rally gathered momentum.

As an initial reaction, the American dollar had been faltering in to the 95.61 region, its fresh monthly low. However, later, while this report is being written, the 20thof December, GMT. 14.00, the American dollar has been trading around 95.84, attempting to break above key resistance at 96.00.

The American Dollar four hourly chart

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The GBP/USD pair has remained well-supported despite a neutral rate announcement from the Bank of England. Followed by a mixed FED rate decision, the GBP/USD pair has been surfing around 1.2665.

While the market has been trying to absorb the rate hike of fourth quarter from the US FED, the EUR/USD upsurge begins and the US stocks started to be faded away as expected. The standard and poor 500 and Dow Jones Industrial had been jolted downwards below February lows.

EUR/USD four hourly chart

EUR:USD four hourly chart

Bottom Line

As the US FED monetary declared a downsized hike for the next year (two rate hikes instead three, June and December, 2019), the American dollar had been dragged downwards against almost all of the major currencies. While the USD/JPY pair has been reigning at 111.49, lost over 100 pips a day, the market had also experienced a gold upsurge, currently surfing at 1261.15.

Amid evolving market atmosphere and tightened global economy, alongside, a downsized rate hike next year, might push the EUR/USD pair further and a break above 1.1500s seems to be likely on a ratified Italian budget condition. Concomitantly, the GBP/USD pair might soon retest the curious terrain of 1.2700 territory, despite a neutral BoE rate policy.

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[Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]


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