Daily Technical Report
EUR/USD: Bears push lower into 1.3212 after EU Summit.
EUR/USD bears have pushed lower, as expected, following the EU Summit and in price terms, still target support at 1.3212 (25th Nov low) and 1.3146 (Oct swing low).
We have opened a sell trade setup favouring extended downside scope. Our cycle analysis suggests increased volatility over the next two weeks across "risk" proxies, including the equity and commodity markets.
A sustained close beneath 1.3146 will re-establish the larger downtrend from April and target 1.3000 (psychological level), then 1.2870 (2011 major low).
Meanwhile, resistance can be found at 1.3550 (02 Dec high), then 1.3610 and 1.3730. Any rebound into these levels is likely to be short-lived.
Inversely, the USD Index is maintaining its recovery higher and still targets its recent 9-month highs near 80, (a move worth almost 10%).
Speculative (net long) liquidity flows have unwound from recent spike highs (3 standard deviations from the yearly average). This will likely remain strong and help resume the USD’s major bull-run from its historic oversold extremes (momentum, sentiment and liquidity).