EUR/USD: bearish outlook heading over to 2016

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 18, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Guatemala) - EUR/USD has been kicked into touch at the end of 2015 after the ECB events and FOMC combined to equate for a lower single currency versus the dollar as we enter thin liquidity and holiday season.

    The data from here will most likely have very little impact now that the Fed have hiked rates and most of the ebbs and flows will come in from positioning and squaring of books and repatriation flows into USD denominated assets should underpin the strength in the greenback. Commodity prices have been the main driver this year influencing the currency wars while the US has been a stand-alone economy with better domestic fuelled growth than opposing nations, which leaves the divergence between the Fed and other Global central banks compelling.

    However, 2016 will be more of the same Fed-watch while many believe that the Fed was too hasten to act and hike rates while many headwinds still persist such as El Niño, as expressed by Adam Button at Forexlive, a stronger dollar expressed by Ashraf Laidi, founder of Intermarket Strategy Ltd and indeed some even speculate that the Fed hike was a one and done deal, as warned by Boris Schlossberg, Managing Director at BK Asset Management.

    There was a fantastic preface to 2016 FX markets in today's "What will 2016 bring to the Forex traders?" live session that anyone serious about trading FX might enjoy to watch here.

    EUR/USD levels

    Technically, EUR/USD is testing the 20 day ma that guards the 1.0523 recent low. The 200 DMA at 1.1039 offers downside pressures and while trading below here the bears remain in control. A break of there could open up 1.1193/95 2014-2015 downtrend and 55 week ma but in this environment, a greater divergence between the 100 and 200 DMA's would underpin dollar strength.
    For more information, read our latest forex news.

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