Euro: USD/EUR (EUR=X) Consolidates Near 33-Month Low

Euro: USD/EUR (EUR=X) Consolidates Near 33-Month Low

Euro: USD/EUR (EUR=X) Consolidates Near 33-Month Low

EUR/USD posted a second consecutive weekly loss and fell to levels not seen since April 2017 last week. The euro was the weakest among the majors and a divergence is seen in the dollar index (DXY).

The trade-weighted dollar index and EUR/USD typically carry a strong inverse relationship. Last week, however, DXY held below highs posted in September while the currency pair broke to a notable low which could be signaling a slowing of momentum in the dollar. Further, the commodity currencies and the British pound posted weekly gains against the greenback.

With US banks on holiday in observance of President’s day today, and light economic data, the week is expected to have a slow start. Volatility is likely to pick up later in the week as the Fed releases minutes from their latest meeting on Wednesday. PMI data out of Europe will be released on Friday.

Coronavirus fears in the markets have subsided a great deal and the S&P 500 posted a second consecutive weekly gain to close at a fresh record high. The German DAX followed the upward momentum in the global equity markets and closed at a record high for the first time in two years.

Technical Analysis

EUR/USD reached oversold territory last week although the current downward momentum resembles that of 2018. In the second quarter of 2018, EUR/USD had started a move lower which resulted in seven consecutive weekly declines.

For that reason, the probability of a bounce higher does not appear very high, even though notable support is in play.

Technical Indicators

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 1.10.

The projected upper bound is: 1.09.

The projected lower bound is: 1.07.

The projected closing price is: 1.08.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 22 white candles and 27 black candles for a net of 5 black candles.

A doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.

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 9.6773. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 13 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 24.43. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 120 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 -97. This is not a topping or bottoming area. The last signal was a buy 0 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 sell 29 period(s) ago.

Rex Takasugi – TD Profile

FOREX EUR= closed up 0.000 at 1.084. Volume was 97% below average (consolidating) and Bollinger Bands were 76% wider than normal.

Open     High      Low     Close     Volume___
1.084 1.084 1.083 1.084 1,702
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.09 1.11 1.11
Volatility: 3 5 5
Volume: 64,041 59,051 72,481

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 2.5% 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 very strong flows of volume out of EUR= (bearish). Our trend forecasting oscillators are currently bearish on EUR= and have had this outlook for the last 22 periods. Our momentum oscillator is currently indicating that EUR= is currently in an oversold condition.

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