Euro: USD/EUR (EUR=X) Decline Pauses

Euro: USD/EUR (EUR=X) Decline Pauses

Euro: USD/EUR (EUR=X) Decline Pauses

The euro has been under a significant amount of pressure in the month thus far and has declined over two and a half percent against the greenback. EUR/USD has only posted one positive session over the last 12 and trades at lows not seen since early 2017.

Economic sentiment in Germany was reported to turn sharply lower. The ZEW indicator fell 18 points to a reading of 8.7, well below analysts estimates. Concerns over the Coronavirus weighed on sentiment and ZEW President Professor Achim Wambach commented: “economic development is rather fragile at the moment.”

The US dollar has advanced in the month thus far, although the strength has not been broad-based. Three of the major currencies have made small gains against the greenback since the start of February while the Euro shows the biggest loss among the majors.

Apple’s Coronavirus warning triggered a sharp fall in the global equity markets on Tuesday although most of the global indices are seen recovering in the early day. The German DAX is up about half a percent shortly after the European open, recovering two-thirds of Tuesday’s loss.

The sudden shift to risk aversion provided a catalyst for a rally in gold prices towards highs not seen since the US-Iran escalation in early January. The yellow metal has extended the upward momentum in the early day and trades firmly above $1600. Gold is up about 4% against the euro and broke to a fresh record high last week.

Technical Analysis

The downside momentum continues to remain strong for EUR/USD. The slight pause at 1.0800 is not providing any reason to believe the pair will recover from here.

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 white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 22 white candles and 27 black candles for a net of 5 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 14.1243. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 14 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 25.37. 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 121 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 -105.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 14 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 30 period(s) ago.

Rex Takasugi – TD Profile

FOREX EUR= closed up 0.002 at 1.081. Volume was 23% above average (neutral) and Bollinger Bands were 85% wider than normal.

Open     High      Low     Close     Volume___
1.079 1.081 1.078 1.081 77,575
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: 4 5 5
Volume: 72,342 60,894 72,710

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 2.7% 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 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 23 periods. Our momentum oscillator is currently indicating that EUR= is currently in an oversold condition.

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