Part One: Fundamental Outlook
What moves EURUSD in 2016 ?!
1-Federal Reserve Bank of America
In Dec 2015, the Fed – as widely expected – approved a quarter-point increase in its target funds rate. The new target will go from 0 percent to 0.25 percent to 0.25 percent to 0.5 percent. Most members expect the new rate to coalesce around 0.375 percent before the next hike.
This development showed that the US economy is entering a new phase of recovery. Many economists believe the Fed will hike rates 4 times in 2016, personally; I think whatever the Federal Reserve’s decision ??? Things are going in favor of the US economy!!
2- European Central Bank & Eurozone economy
Markets will be focusing on a €1.1 trillion quantitative easing program which was released at the beginning of 2015 by the ECB. The Program will be ending in Sept 2016. If inflation and growth do not make significant upside progress in the Euro-ZOne, the ECB may need to expand the program in Sept 2016. The European Central Bank’s decision should affect the EURO directly.
3- The situation in the Middle East (Syria & Iraq).
The situation in the Middle East has a strong impact on the global economy, both of the US dollar and the euro get affected by the critical situation in the middle east. The eurozone was the victim of the biggest events in the troubled Middle East…As a result, as long as things are continued unstable in the Middle East, the EURO will remain under pressure!
4-It’s all about Greece (Time-bomb)!
Greece on the edge of a very dangerous downhill, all crises in the Euro-Zone are rooted with Greece. The absence of bad news from Greece means good news for the eurozone, and the Euro may try to recover in the absence of bad news from Greece, but in return; Any negative news from Greece, its impact will be like an earthquake on the EuroZone…
5- Oil & Gold prices!
Crude Oil prices for the USD while Gold prices for the Euro?? How it works???!!!
A-If Crude Oil goes down while Gold prices move sideways or upward, this scenario should support the Euro against the U.S dollar.
B – If Crude Oil moves sideways while the Gold moves upwards, this scenario will also support the Euro against the U.S dollar.
C- If Crude Oil moves upward while Gold moves sideways or downward, this scenario will advance the U.S dollar against the Euro!!!
The dollar should win against the Euro in 2016, but in the real world, sometimes things go differently a little bit, anyway: any recovery for the Euro against the U.S dollar in 2016, It should be limited by Greece, keep that in mind!
Part Two: Technical Outlook
The EURUSD continued its bearish momentum in 2015, the first assumed target of the 1.6035/1.2097 move has been reached at the 1.1025 levels 127.2% extension the same run. Bottomed at the 1.0461 levels, below the critical support 1.0493 close of 2002.
This development suggests that fall from the 1.6035 levels – 2008 highs – has been completed at the 1.0461 levels, and a rebound is likely before the next move…
On the upside, a failure to hold losses below the key support 1.0493 could mean a return to the 1.1876/1.2097 levels before the next fall. However; a clear break above the 1.2097 levels will extend recovery towards the 1.2745/1.3287 levels ahead of the 1.3993 levels (main) before the next fall. Above 1.3993 will pave the way towards the 1.6035 levels.
On the downside, support comes at the 1.0493 levels, sustained breakout below the 1.0493 levels will pave the way towards the 0.9660 levels ahead of the 0.8900 levels (main) before the next rise, further down, support comes at the 0.8225 levels.
Conclusion: The EURUSD continues to face recovery threats above the 1.0493 levels in the long term forecast, below 1.0493 faces a fall risk towards the 0.8900 levels…
Conclusion (Fundamental & Technical).
The fundamental view is bearish for the pair, but technical outlook suggests consolidation or rebounds before the next fall, so…It’s normal to retest 1.2000 levels before the next fall…
Support and resistance levels:
0.8225, 0.8900 (main), 0.9660, 1.0493 (main), 1.1876, 1.2097 (main), 1.2745, 1.3287, 1.3993 (main).
The most critical events which may affect the EURUSD pair in 2016:
The simple answer is Greece …keep an eye on Greece when the pair is near to support and resistance levels…