The EURUSD pair is currently finding solid support in zone 1.12700-1.12800, breaking above the moving averages MA20 and MA50 in zone 1.13000. If EURUSD stays above until the end of the day, we can expect the pair to move on to higher levels. Bullish scenario:
We need a continuation of this currently positive consolidation, which with the support of MA20 and MA50 moving averages, should move this pair towards the next resistance at 1.13500.
Our next resistance is at 1.14000 with the additional pressure of the MA200 moving average, which can once again increase the bearish pressure.
Bearish scenario:
We need a negative consolidation and withdrawal of EURUSD below the MA20 and MA50 moving averages and 1.130000.
Then in the zone 1.12700-1.2800, we find support in the lower trend line.
The break below the trend line directs us towards the December low at 1.12200, and if it doesn’t last, we go down to this year’s lower low at 1.11850.
Market overview
Eurozone industrial production unexpectedly recovered in October, Eurostat data showed on Tuesday. Industrial production rose 1.1 percent on a monthly basis, reversing a 0.2 percent decline in September. Economists predicted a 0.5 percent drop in production in October. Capital goods production recorded the highest monthly growth of 3 percent in October among the major industrial groups. The production of durable consumer goods increased by 1.7 percent, and the production of non-durable consumer goods increased by 0.4 percent. On an annual basis, industrial production grew by 3.3 percent, but slower than the 5.1 percent growth recorded in the previous month and economists’ forecast of + 4.1 percent. Industrial production in the EU27 advanced 1.2 percent on a monthly basis, bringing annual growth to 3.6 percent in October. Persistent supply bottlenecks and the fourth wave of coronavirus infection in Germany are further delaying the recovery of Europe’s largest economy from the pandemic, the Ifo Institute said on Tuesday, lowering its growth forecast for next year. The Ifo Institute expects the German economy to shrink by 0.5% on a quarterly basis in the last three months of this year and to stagnate in the first three months of next year. Along with the current rise in total prices, Germany is now facing several winter months of zero growth and unusually high inflation, a combination that economists have described as stagflation. For 2022, Ifo lowered its forecast for economic growth to 3.7% from 5.1% projected in September and confirmed its already reduced forecast of 2.5% for this year. For 2023, he raised his growth forecast to 2.9% from 1.5%. “The strong recovery originally expected for 2022 will be further suppressed,” said Ifo chief economist Timo Volmershaeuser. The Ministry of Economy also shares the gloomy perspective, stating in its monthly report on Tuesday that the government expects to see a “rather weak” economic performance in the last quarter of this year. Activities in the services sector are likely to slow as Germany faces renewed restrictions to break its fourth wave of COVID, while bottlenecks in the supply of microchips, especially in the automotive industry, are hampering production, the ministry said.
