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EUR/USD formed a doji candlestick last week

Decisive Week For EUR/USD

Posted Monday, December 12, 2022 by
Skerdian Meta • 2 min read

EUR/USD has made quite a reversal in the last two months, with the bullish momentum picking up particular [axe in November, although this has been mostly a Dollar move. This pair has been declining since early 2021 after the coronavirus pandemic spread worldwide and fell below parity, reaching 0.9540s at the end of September as the FED kept raising interest rates at a very fast pace since the beginning of 2021, while the European Central Bank started hiking rates in summer.

Although, the time would come when the FED would pivot and the recent rhetoric is pointing at that, with expectations for this week’s meeting for a 50 basis points (bps) hike, which is already a slowdown from the 75 bps hikes in the last three meetings. They are supposed to slow down further in 2023 and stall not too far away from now, which has been weighing on the USD since late September. But, the exact path the FED will follow isn’t clear yet. So, this is one of the factors which will have a great impact on EUR/USD this week, particularly the press conference from Jerome Powell.

The other side of the coin is the Euro behaviour. The ECB has delivered two 75 bps rate hikes in the last two meetings after a 50 bps hike in July and is expected to slow down as well, to 50 bps on Thursday. But, the future path will be important for the Euro, so we will follow live the press conference from Christine Lagarde.

The Euro has benefited from the USD weakness but last week sellers matched the buyers in volume and the price formed a doji candlestick on the weekly chart, which is a bearish reversing signal after the bullish momentum. The stochastic indicator is overbought as well on the time frame, so there might be a reversal brewing up.

EUR/USD Live Chart

EUR/USD
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