EUR/USD: Contained By The Dec/Jan Bull Flag - Nomura
EUR/USD: Pair Trades Below $1.09, Lacking Direction The pair has been directionless this week and has been hovering around the $1.09 mark pretty much all the time.
It was seen changing hands around $1.0870 during the London session on Friday, waiting for US macro figures later in the day, although they might be ignored by traders.
The US economy will reveal retail sales for December, which are projected to decline marginally and PPI inflation indices, which should also deteriorate from previous levels.
"Today’s final retail sales numbers for 2015 is likely to bookend a disappointing year for US consumers, with a decrease in December retail sales of 0.1% expected, down from 0.2% in November. This is a disappointing result given the fiscal boost lower oil and gasoline prices have given to the US consumer over the last 12 months. Over the calendar year this would mean an overall gain of 2.3%, and compares poorly with the UK’s 5.5% rise," Michael Hewson, chief market analyst at CMC Markets UK,said.
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EUR/USD is still contained by the Dec/Jan bull flag, notes Nomura.
"This pullback towards 1.08 has met the channel midpoint and a 61.8% Fib retrace. We are treating this decline as an A-B-C correction so we favor a rally and eventual breakout through flag resistance.
S/t, support is near 1.0803 made up by a pivot and Fib retracement," Nomura adds.
The first signal that EUR/USD is resolving higher is the current move above 1.0840 trend and pivot resistance. Above 1.09 further promotes the outlook for a bull flag breakout," Nomura argues.