This morning, the EUR/USD rate moved above 1.1680 during early trading — its highest level since mid-October. The main driver behind the rise is traders’ assessment of the diverging policies of central banks. Based on the fundamental outlook ahead of the December meetings:

→ The market is almost certain that the Federal Reserve will cut rates in December under pressure from the Trump administration, making the dollar appear less profitable and less attractive.
→ The ECB, by contrast, has adopted a wait-and-see stance. Inflation in the Eurozone is close to target, and there seems to be no intention to cut rates aggressively for now.

Technical Analysis of the EUR/USD Chart

In November, the pair formed a broad balance zone:
→ The 1.1500 level acted as support — the price dipped below it twice, but failed to hold beneath this psychological mark.
→ A downward sloping trendline (shown in red) served as resistance.

At the start of December, we see that price growth within the blue ascending channel has led to a bullish breakout above the red resistance line.

However, the chart suggests that the rally may now be losing momentum, because:
→ As the arrow indicates, this morning’s attempt to surpass yesterday’s high may result in a candle with a long upper wick.
→ RSI conditions point to a possible bearish divergence between price highs A and B.

It is possible that the EUR/USD rise to a 1.5-month high could attract sellers — therefore, forex traders should not rule out a pullback towards the lower boundary of the blue channel. A retest from above of the red line is also possible.

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.