Current trend

The EUR/USD pair is growing within the framework of a medium-term uptrend: this week, quotes are again testing the 1.1169 mark (Murrey level [7/8]), above which they cannot break through for two months. Currently, the market is in a state of uncertainty, as the prospects for significant monetary easing by the US Federal Reserve are balanced by the possibility of similar actions by the European Central Bank (ECB).

Recall that last week, the US regulator reduced the cost of borrowing by 50 basis points, to 5.0%, while members of the board of the US Federal Reserve Austan Goolsbee, Raphael Bostic and Neel Kashkari actively hinted at the likelihood of further reduction in order to prevent excessive pressure on the labor market. Currently, most experts expect a twofold adjustment of the Fed's key rate by the end of the year with a total volume of 50 basis points, but the option of a reduction by 75 basis points is not excluded.

Such actions by officials can provide significant pressure on the US currency and the growth of the pair, but it can be restrained by easing monetary policy on the part of the ECB: the regulator adjusted interest rates in July and September and is likely to do so again at the December meeting. Recall that in the second quarter, the growth of the Eurozone's gross domestic product (GDP) slowed to 0.2%, and September business activity data were negative. Thus, a reduction in the cost of borrowing by the ECB is becoming increasingly necessary. Nevertheless, given the different number of future meetings of the regulator in the USA and the Eurozone (two against one until the end of the year), further growth of the EUR/USD pair in the medium term looks the most likely scenario.

Support and resistance

Technically, the pair is testing the 1.1169 mark (Murrey level [7/8]), consolidating above which will allow quotes to continue growing towards the targets of 1.1291 (Murrey level [ 1/8]), 1.1352 (Murrey level [ 2/8]). After the breakdown of the central line of Bollinger Bands (1.1090), the downtrend may resume to the levels of 1.0986 (Murrey level [4/8]) and 1.0925 (Murrey level [3/8]).

Technical indicators do not give a clear signal: Bollinger Bands are horizontal, MACD is stable in the negative zone, while Stochastic is pointing downwards.

Resistance levels: 1.1169, 1.1291, 1.1352.

Support levels: 1.1090, 1.0986, 1.0925.

Trading tips

Long positions can be opened above 1.1169 with targets of 1.1291, 1.1352 and a stop-loss around 1.1100. Implementation period: 5–7 days.

Short positions should be opened below the level of 1.1090 with targets of 1.0986, 1.0925 and a stop-loss around 1.1160.