Fundamental Analysis
The USD’s revaluation on Tuesday, December 10, 2024, is largely driven by expectations of a 25 basis point rate cut by the European Central Bank (ECB), which would weaken the euro. Markets have already priced in this adjustment, putting pressure on EUR/USD, which has dropped near 1.0520. The ECB’s expansionary monetary policy, contrasted with the Federal Reserve’s more restrictive stance, supports the dollar.
Furthermore, political uncertainty in France and Germany, coupled with the potential negative impact of Donald Trump’s trade policies, is contributing to the euro’s weakness. Internal tensions in the Eurozone and economic slowdown heighten expectations of moderate growth, reinforcing the view that the USD will remain strong against the euro.
Technical Analysis
Dollar Index, H1
Supply Zones (Sell): 106.50
Demand Zones (Buy): 106.06 and 105.85
The Dollar Index shows a bullish reversal structure after decisively surpassing 106.00, leaving behind two volume concentrations with uncovered POCs at 105.85 and 106.06, representing demand zones with liquidity for bulls.
Under current conditions, the bullish opening has reached local resistance at 106.38, and may correct towards the broken Asian high at 106.19 or more extended to 106.06, from where buying can resume towards the uncovered POC at 106.50, with extension to the average bullish range at 106.67. This bullish scenario remains valid as long as support at 105.97 holds.
EURUSD, H1
Supply Zones (Sales): 1.05529
Demand Zones (Purchases):1.0529 and 1.0498
The bearish opening has left a volume concentration around 1.0552, the supply zone that initiated the downward move. If demand zones are defended by bulls, a bounce towards 1.0532 is possible, from where selling can resume. On the other hand, if the bearish momentum decisively breaks below 1.0529 and support at 1.0521, further declines are expected towards 1.0510 and possibly 1.0500.
The bearish scenario remains in play unless the price breaks above the Asian resistance and the day’s high at 1.0568.
Technical Summary
- Corrective Bullish Scenario: Buy above 1.0533 with TP at 1.0550 intraday, then resume selling. Use a 1% capital stop loss with a low lot size to allow room for movement.
Bearish Scenario after Retracement: Sell below 1.0552 with TPs at 1.0500 and 1.0480 intraday, and 1.0446 in the coming days. - Anticipated Bearish Scenario: If the price decisively drops below 1.0521, target 1.0500, 1.0480 intraday, and continue downward with TP at 1.0447 in the following days.
- Always wait for the formation and confirmation of a Reversal/Exhaustion Pattern (PAR) on the M5 chart, as shown here: https://t.me/spanishfbs/2258 before entering trades at the key zones indicated.
Uncovered POC: POC = Point of Control: It is the level or area where the highest volume concentration occurred. If a bearish move followed it, it’s considered a sell zone and forms resistance. Conversely, if an upward move followed it, it’s seen as a buy zone, typically at lows, forming support.
, which would weaken the euro. Markets have already priced in this adjustment, putting pressure on EUR/USD, which has dropped near 1.0520. The ECB's expansionary monetary policy, contrasted with the Federal Reserve’s more restrictive stance, supports the dollar.){kind=link}