The EURUSD is trading near session lows for the day in what has been a choppy up and down session as the market traders ponder the track of the USD as the Fed moves to taper and moves toward tightening in 2022. Despite that, the US yields are lower, not higher, and inflation is also moving higher. The growth is expected to remain strong, but covid/omicron remain a potential risk.
Listening to Fed Williams on CNBC, the Fed is also somewhat all over the place as he admits that inflation is too high but the Fed's course of action is still appropriate (with the Fed still buying some $100B of treasuries per month - although they will be tapering that over the next 3-4 months).
Looking at the hourly chart of the EURUSD, the price closed last Friday at 1.13168. The current price is trading at 1.1310. So overall, the pair is virtually unchanged on the week (moving a little lower as I speak).
Tracking the price action this week, the low was on the Fed day (Wednesday). That low came in at 1.12208. On the move, the price move below recent swing low levels between 1.1226 and 1.1233. However, it came during the volatility of the Fed decision and was quickly reversed. PS. The pair closed above its 100 and 200 hour moving averages on that day up near 1.1287 (some 60 pips from the low for the day)..
During trading yesterday, the pair held support near the 100 and 200 hour moving averages (blue and green lines) before moving to the high for the week. That high for the day stalled near 1.1359 which was near the swing high going back to December 1 (high for the month) the price then fell sharply back down toward the midpoint of the range since November 30 at 1.13015 rally once again. The high price during today's trade stalled ahead of the high for the week in near a swing high going back to December 2.
Needless to say the summary highlights the volatile up and down price action this week and today,, but as I type the pair is making a new session low and looks to retest the 50% midpoint of the range since November 30 at 1.13015. On further weakness, the 200 and 100 hour moving averages (green and blue lines), are getting closer at 1.1291 and 1.12938 respectively. A move below the 50% and the hourly moving averages would tilt the bias more in the downward direction.
On the topside if the price can hold the 50%, getting back above 1.1323, 1.1333 and 1.13469 are all swing high levels that have been in play in the up and down trading environment seen in December. Of course the 1.1359 level will also be a key topside target to get to and through if the pair is going higher.
Overall, if the analysis is up and down and noncommittal, it is a function of the market price action. What I can say is that
- The low this week stalled near the swing lows seen on November 30 and again on December 7.
- The high this week stalled near highs from December 1 and December 8.
So the pair traded the up and down recent range.
The midpoint of that range is being tested in early trading. The price is also not far from its closing level on Friday a week ago.
All of which says, "the market" (that is all the traders around the world) are not too sure and are confused as well. Kinda like the Fed too.
