Euro: USD/EUR (EUR=X) Avoids Losses despite ECB Easing Measures
Both the Euro and US Dollar were fairly volatile last week, driven by shifts in global trade sentiment as well as the latest central bank news and speculation, but the Euro to US Dollar (EUR/USD) exchange rate ultimately closed the week fairly closely to its opening levels. Looking ahead, central bank speculation will likely continue to drive movement in the pair as the Federal Reserve will be holding its anticipated September policy decision.
After opening last week with mixed movement, EUR/USD spent the first half of the week trending with a downside bias and briefly touched on a low of 1.0934 after Thursday’s European Central Bank (ECB) news. This was just above the low of 1.0933 seen at the beginning of the month, which was also the worst EUR/USD level in over two years.
Continued reaction to the ECB news helped EUR/USD to recover though, and towards the end of the week the pair was trending closer to the week’s opening levels again.
EUR/USD Struggles for Direction on Central Bank Speculation
Amid underwhelming Eurozone and US data, combined with fresh US-China trade hopes and the European Central Bank’s (ECB) latest easing package, last week was a volatile one for the Euro and US Dollar.
US Dollar demand was weakened throughout the week, as US-China trade tensions appeared to ease ahead of the next expected round of negotiations.
This left investors eager to buy riskier trade-correlated currencies, which doused the safe US Dollar’s appeal.
Speculation that the Federal Reserve could take a much more dovish stance on the US economy as soon as next week also weighed on the US currency.
This meant that much of the week’s EUR/USD movement was driven by the Euro’s reaction to the European Central Bank, particularly on Thursday and Friday.
The Euro briefly plunged when the ECB announced its deposit rate cut and introduced its latest comprehensive easing package. However, the currency quickly recovered as the stimulus package was not as dovish as many analysts had expected.
As some economists, including some ECB officials, expressed doubts about the effect of ultra-light monetary policy effectiveness, the Euro saw an even stronger rebound.
Speculation of Eurozone fiscal stimulus is now rising, while bets of deeper lightening from the ECB are falling.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 1.11.
The projected upper bound is: 1.12.
The projected lower bound is: 1.10.
The projected closing price is: 1.11.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 20 white candles and 29 black candles for a net of 9 black candles.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 81.2853. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 8 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 49.42. 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 buy 9 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 102.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 8 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 5 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed down -0.000 at 1.107. Volume was 99% below average (consolidating) and Bollinger Bands were 15% narrower than normal.
Open High Low Close Volume___
1.109 1.109 1.107 1.107 971
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.10 1.11 1.13
Volatility: 5 6 6
Volume: 75,369 81,450 111,998
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.
FOREX EUR= is currently 1.7% below its 200-period moving average and is in an downward trend. Volatility is relatively normal 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 bearish on EUR= and have had this outlook for the last 49 periods.
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