The first trading day after Christmas the currency exchange rate started in a located between the 1.1865 and 1.1876 levels. Because of an empty economic calendar and decreased liquidity the pair is likely to continue moving horizontally. In short the term, the rising 55- and 100-hour SMAs most probably will stimulate the rise of the Euro against the Dollar. However, in larger perspective the exchange rate is expected to keep moving downwards due to inability to bypass the 61.8% level located at the 1.1887 mark. In support of this assumption, 54% of pending orders in 100-pip range are set to buy, while the aggregate market sentiment is 67% .
In accordance with expectations, previous trading session the currency rate mostly spent fluctuating between support and resistance zones located near the 1.1848 and 1.1876 levels. From the very first hours of the new trading day the pair inched higher to test the 61.8% Fibonacci retracement level at 1.1887. Due to formation of a junior ascending channel that is backed up by a combination of the 55- and 100-hour SMAs the exchange rate might actually break to the top. The fact that majority of pending orders are set to buy confirms this assumption.
On the other hand, a number of technical indicators signal that the pair has already become overbought. There is a need to notice that apart of the CB Consumer Confidence release there are planned no macroeconomic data releases that could heat the further surge.
In regards to the future of the EUR/USD pair, it can be expected that the surge will continue until it reaches the upper trend line of the pattern, which forced the breaking of the dominant resistance. The trend line at current angle would be reached near the 1.1960 level.
The second part of the session, however, did not show much change in the pair’s direction, as it remained fluctuating in the 1.1940/60 area during this time.
Even though some technical indicators are still flashing strongly bullish signals, the rate is unlikely to surge massively. The nearest resistance—the weekly R3 located at 1.1997—could be the ultimate high for today.
Meanwhile, the rate should edge lower in line with the aforementioned wedge. This fall, however, is not expected to be significant, as its lower boundary is supported by the weekly R1 and the 55-hour SMA circa 1.1925.
Namely, the currency exchange rate moved past the previously drawn short term and medium term pattern resistance lines near the 1.1980 mark. Moreover, the currency rate did not stop there.
In the following hours and as the new year started the currency pair just extended the gains to the upside. On Tuesday morning the currency rate was already located at the 1.2050 mark.
Moreover, the closest resistance was near the 1.21 level.