Euro: USD/EUR (EUR=X) Currency-Hedged Positions Attractive for U.S.-dollar Investor
The ECB’s negative interest rate policy has made yields unattractive and vulnerable to the improving growth
outlook. We expect core eurozone yields to rise. We are cautious on peripherals given tight valuations, political
risks in Italy and the upcoming end to the ECB’s net asset purchases.
Increased issuance and political risks have widened spreads and created some value. Negative rates have
crimped yields — but rate differentials make currency-hedged positions attractive for U.S.-dollar investors. We
are cautious on subordinated financial debt despite cheaper valuations.
Valuations of hard-currency debt have become more attractive relative to local-currency bonds and developed
market corporates. Further valuation support comes from slowing supply and strong EM fundamentals. Trade
disputes and a tightening of global financial conditions are downside risks.
Intraday bias in EUR/USD is turned neutral again as it lost upside moment. Outlook is unchanged though as consolidation from 1.1507 might extend. In case of another rise, upside should be limited by 1.1851 resistance to bring fall resumption eventually. On the downside, below 1.1612 will bring retest of 1.1507 low first. Decisive break there will resume larger fall from 1.2555. In that case, EUR/USD should drop through 50% retracement of 1.0339 to 1.2555 at 1.1447 to 61.8% retracement at 1.1186.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 1.18.
The projected lower bound is: 1.15.
The projected closing price is: 1.17.
During the past 10 bars, there have been 5 white candles and 4 black candles for a net of 1 white candles. During the past 50 bars, there have been 25 white candles and 24 black candles for a net of 1 white 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 45.3916. This is not an overbought or oversold reading. The last signal was a sell 6 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 46.70. 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 35 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 -56. This is not a topping or bottoming area. The last signal was a sell 5 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 17 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed unchanged at 1.166. Volume was 98% below average (consolidating) and Bollinger Bands were 40% narrower than normal.
Open High Low Close Volume___
1.166 1.166 1.165 1.166 3,113
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.17 1.17 1.20
Volatility: 6 9 9
Volume: 137,908 151,555 128,415
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 2.7% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 13 periods.
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