28.11.202408:49 Forex Analysis & Reviews: EUR/USD Review for November 28, 2024: The Euro Takes Its First Step Forward

The EUR/USD currency pair succeeded in surpassing the moving average line on Wednesday after numerous attempts. Notably, this occurred even before the release of U.S. macroeconomic statistics, which were published simultaneously and could theoretically have influenced the pair's movements. Speculation suggests that market makers may have had prior knowledge of the reports, prompting them to reduce their dollar holdings. However, the dollar's decline of a few dozen points hardly qualifies as a collapse or widespread sell-off.

The key report of the day, which was not GDP, came in weaker than expected but not significantly so. Durable goods orders in October rose by just 0.2%, compared to traders' expectations of a 0.5% increase. Meanwhile, GDP in its second estimate remained at 2.8%, unchanged from the first estimate. Unemployment claims were largely in line with forecasts. As a result, despite the break above the moving average, we do not anticipate a strong rally for the euro.

Essentially, the pair has started a correction. Given strong indications that this growth is corrective in nature, long positions might not be advisable. While the correction could extend significantly, its magnitude remains uncertain and will largely depend on macroeconomic and fundamental factors in the near future. For now, we acknowledge the start of a correction but maintain a medium-term bearish outlook for the euro.

On the weekly timeframe, the last upward correction lasted two years. Therefore, even on the four-hour timeframe, the current correction could take considerable time. The next target level could be 1.0636, as the critical line on the daily chart lies there.

The average volatility of the EUR/USD currency pair over the last five trading days, as of November 28, is 115 points, characterized as "high." We expect the pair to move between the levels of 1.0465 and 1.0695 on Thursday. The senior linear regression channel remains downward, confirming the persistence of the global downtrend. The CCI indicator has entered the oversold zone multiple times, signaling the potential for an upward correction.

Support Levels:

• S1 – 1.0498
• S2 – 1.0376
• S3 – 1.0254

Resistance Levels:

• R1 – 1.0620
• R2 – 1.0742
• R3 – 1.0864

Trading Recommendations:

The EUR/USD pair continues its downward movement. For months, we have anticipated a medium-term decline for the euro and maintain our bearish outlook. It is likely that the market has already priced in most or all of the Federal Reserve's anticipated rate cuts. If this is the case, the dollar still lacks strong reasons for a medium-term decline.

• Short positions are recommended with targets at 1.0376 and 1.0254 if the price settles below the moving average.
• Long positions are viable only above the moving average with targets at 1.0620 and 1.0695, though we currently do not recommend long positions.

Explanation of Illustrations:

• Linear regression channels help determine the current trend. When both are aligned, the trend is strong.
• The moving average line (settings 20,0, smoothed) defines the short-term trend and the direction for trading.
• Murray levels indicate target levels for movements and corrections.
• Volatility levels (red lines) represent the probable price channel for the next 24 hours based on current metrics.
• The CCI indicator signals an impending trend reversal when entering the oversold zone (below -250) or overbought zone (above +250).