BREXIT – Euro (€) ⇨ US Dollar ($) (EURUSD) – Manchester

BREXIT – Euro (€) ⇨ US Dollar ($) (EURUSD) – Manchester

BREXIT – Euro (€) ⇨ US Dollar ($) (EURUSD) – Manchester

Europe and Brexit

Europe was predicted to be in a position of uncertainty should Britain leave the EU, with other countries at risk of following them. However, the recent election in France assuaged a lot of global fears around this. Had right-wing candidate Marine LePen won this election, it would have been very likely France would have taken steps to exit the union, and this would have been likely to trigger the much talked about ‘domino effect’ that analysts feared would be the end of the EU as we know it.

With Macron securing a big win, it has quelled fears about this and bolstered the euro. This means that the situation in terms of the pound to euro exchange rate is now favourable for eurozone countries and looks likely to remain that way with the pound likely to remain depreciated for the foreseeable future.

It is worth noting however, that the FTSE 100 is not strongly tied to the pound, and that the London Stock Exchange has not fared badly at all of late.

How Has Brexit Affected the Euro So Far?

The main effect on the euro over the course of the last year is that it has been worth considerably more against the pound. The euro now regularly fetches around 87p and has been as high as 90p at times. However, before, the referendum prices were closer to 76p to one euro.

This is more due to the pound dropping against just about everything in the wake of the decision, rather than the euro looking stronger with Britain out of the EU, and the euro’s price against the dollar has shown a different pattern.

The euro was able to buy $1.13 around the time of the referendum, but now, after a low of $1.04 in December, it is pushing up around the $1.12 mark. What this really means is that the euro’s buying power, both against the pound and the dollar, is really more affected by the rises and falls of those currencies in the global markets than by the events that triggered them (namely Brexit and Trump).

The pound to euro exchange rate has fallen to a two-month low today after new voter polls have shown Labour has slashed the Conservative Party’s lead to just five points. 

GBP/EUR is down -0.4 per cent to €1.148 as the outcome from the June 8 General Election becomes shrouded in uncertainty.

Theresa May had announced the snap election on April 18 in the hopes of capitalising on the Conservative’s strong majority over Labour; the party was 18 points ahead at the time.

The euro has been drifting this week, and continues to stay close to the 1.12 level. Currently, EUR/USD is trading at 1.1220. For a second straight day, there are no releases in the eurozone. It’s a busy day in the US, highlighted by Second Estimate GDP, which is expected to post a gain of 0.9%, better than the initial GDP report of 0.7%. This will be followed by Core Durable Goods Orders and UoM Consumer Sentiment. Leaders of the G7 are gathered in Sicily for a two-day meeting, with the response to global terror high on the agenda, especially in light of the Manchester bombing earlier this week.

Overall, the bias in prices is: Upwards.

Short term: Prices are moving.

Intermediate term: Prices are trending.

By the way, prices are vulnerable to a correction towards 1.09.

The projected upper bound is: 1.13.

The projected lower bound is: 1.10.

The projected closing price is: 1.12.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 56.7225. This is not an overbought or oversold reading. The last signal was a sell 2 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 63.76. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 3 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 61. This is not a topping or bottoming area. The last signal was a sell 2 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 8 period(s) ago.

Rex Takasugi – TD Profile

FOREX EUR= closed down -0.004 at 1.117. Volume was 18% below average (neutral) and Bollinger Bands were 60% wider than normal.

Open   High   Low    Close    Volume
1.121    1.123   1.116   1.117     92,843

Technical Outlook
Short Term:                Overbought
Intermediate Term:  Bullish
Long Term:                 Bullish

Moving Averages: 10-period   50-period   200-period
Close:                       1.12              1.09             1.08
Volatility:                10                 9                  9
Volume:                  115,673       105,693       113,556

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary
FOREX EUR= is currently 3.2% above its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of EUR= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on EUR= and have had this outlook for the last 24 periods.

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John Heffernan

John Heffernan is a Junior Analyst at HEFFX. John is studying Economics and is a contributor on equities at Live Trading News.

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