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EUR/USD looks to finish the day flat near 1.1340

12/6/2018, 10:54:31 AMMarket Analysis
EUR/USD looks to finish the day flat near 1.1340

Since the start of the week, the EUR/USD pair is having a difficult time making a decisive move in either direction and looks to close the day virtually unchanged near the 1.1340 handle on Wednesday after fluctuating in a relatively tight 50-pip range.

Earlier today, the data released by the Eurostat showed that retail sales in October, which contracted 0.5% in September, rebounded and rose 0.3% to surpass the analysts' estimate of 0.2%. Additionally, the IHS Markit's Services PMI and Composite PMI figures both came in above market expectations to give an additional support to the shared currency. However, underlying details of the PMI report revealed that the economic growth in the eurozone continued to slow in November.  

Commenting on the PMI report, “The final eurozone PMI for November came in higher than the flash reading but still only points to modest GDP growth of approximately 0.3% in the fourth quarter, suggesting the region remains stuck in a soft-patch," said Chris Williamson, Chief Business Economist at IHS Markit.

Meanwhile, in an interview with ANSA, Italy's Deputy Prime Minister Luigi Di Maio noted that the climate was changing in budget talks with the EU and reiterated that the government wanted to make sure to avoid any disciplinary actions from the EU.

With the U.S. markets staying close on Wednesday, the second half of the day didn't offer any catalysts and allowed major pair to go into a consolidation phase. In its Beige Book, "Most of the twelve Federal Reserve Districts reported that their economies expanded at a modest or moderate pace from mid-October through late November," the Federal Reserve said to point to an upbeat near-term outlook. 

Technical outlook by FXStreet Chief Analyst Valeria Bednarik

The pair has been trading in a well limited 100 pips' range for over a week already and doesn't seem in a rush to go anywhere fast. There's a daily ascendant trend line coming from November lows at around 1.1300 providing a psychological support, while a strong resistance comes at around 1.1425 with a stronger one at 1.1460. It would take some follow-through beyond this last for the pair to actually turn bullish.

In the meantime, the short-term picture offers a neutral-to-negative stance, with the pair currently battling with converging 20 and 100 SMA, unable to gain ground above them, and technical indicators hovering around their midlines without strength enough to confirm an upcoming direction ahead.

Support levels: 1.1315 - 1.1290 - 1.1260.