Forex Market: EUR/USD daily trading outlook

Yesterday’s trade saw EUR/USD within the range of 1.0827-1.0901. The pair closed at 1.0892, rising 0.52% on a daily basis, which followed two consecutive trading days of losses.

At 7:18 GMT today EUR/USD was gaining 0.28% for the day to trade at 1.0922. The pair touched a daily high at 1.0929 at 7:00 GMT, undershooting the upper range breakout level (R4). EUR/USD managed to break and close above a key resistance at the 38.20% Fibonacci (1.0896), which reflects the descent from October 15th high to December 3rd low. Short-term resistance may be encountered next at the high from December 4th (1.0958), then at the daily 100-period EMA and finally at the 50.00% Fibonacci (1.1009). Short-term support may be received at the hourly 21-period EMA (1.0890-1.0900 area).

No relevant macroeconomic reports and other events, which may influence EUR/USD trading, are scheduled for release today.

Bond Yield Spread

The yield on German 2-year government bonds went as high as -0.299% on December 8th, after which it closed at -0.315% to lose 0.003 percentage point in comparison with December 7th. It has been eighth drop in the past twelve trading days and also a second consecutive one.

The yield on US 2-year government bonds climbed as high as 0.947% on December 8th, after which it closed at 0.935% to remain unchanged compared to December 7th.

The spread between 2-year US and 2-year German bond yields, which reflects the flow of funds in a short term, widened to 1.250% on December 8th from 1.247% on December 7th. The December 8th yield spread has been the largest one since December 3rd, when the difference was 1.266%.

Meanwhile, the yield on German 10-year government bonds soared as high as 0.609% on December 8th, after which it slid to 0.579% at the close to lose 0.006 percentage point compared to December 7th. It has been the eighth drop in the past twelve trading days and also a second consecutive one.

The yield on US 10-year government bonds climbed as high as 2.245% on December 8th, after which it slipped to 2.227% at the close to lose 0.009 percentage point compared to December 7th. It has been the 12th drop in the past seventeen trading days and also a third consecutive one.

The spread between 10-year US and 10-year German bond yields shrank to 1.648% on December 8th from 1.651% on December 7th. The December 8th yield difference has been the lowest one since December 4th, when the spread was 1.583%.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for EUR/USD are presented as follows:

R1 – 1.0900
R2 – 1.0907
R3 (range resistance) – 1.0912
R4 (range breakout) – 1.0933

S1 – 1.0885
S2 – 1.0878
S3 (range support) – 1.0872
S4 (range breakout) – 1.0851

By using the traditional method of calculation, the weekly pivot levels for EUR/USD are presented as follows:

Central Pivot Point – 1.0802
R1 – 1.1066
R2 – 1.1246
R3 – 1.1510

S1 – 1.0622
S2 – 1.0358
S3 – 1.0178