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EUR/USD: Buy On Dips
Forex
12/15/2017

EUR/USD: Buy On Dips

The EURU/SD shrugged off the latest ECB statement, which was viewed as dovish by markets. After a dip toward the support area at 1.1760, the pair has recovered part of the post-ECB slide and is probing the 1.18 handle again.

The EURU/SD shrugged off the latest ECB statement, which was viewed as dovish by markets. After a dip toward the support area at 1.1760, the pair has recovered part of the post-ECB slide and is probing the 1.18 handle again.


The dollar didn’t receive any meaningful support from strong US retail sales data as traders are still focused on the Trump’s tax plan. The uncertainty on this front continues to depress the greenback, which plays into the euro’s hands.


The Fed still expects a three-quarter-point rate hike next year. But considering low inflation and a number of other economic as well as political risks in the US, the central bank may be forced to slow down the monetary policy tightening in the longer-term. Meanwhile, the ECB is expected to continue to cut the rate of bond purchases on the back of strengthening economic fundamentals for Germany and the Eurozone.


In the short-term, EUR/USD needs to regain the 1.18 mark. The move above this psychological level will introduce scope to strong resistance at 1.1855. Selling interest is also noted in the 1.1870 zone. Meanwhile the major support is at 1.17 where the pair is still good to buy on dips. The immediate supports come at 1.1770 and 1.1740.


By Helen Rush
Senior Analyst at Capital Markets
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