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Euro: USD/EUR (EUR=X) – Dollar Bulls Encouraged By Fiscal Stimulus Prospects

Euro: USD/EUR (EUR=X) – Dollar Bulls Encouraged By Fiscal Stimulus Prospects

It was a volatile start to the week but the markets have settled as President Trump shifted to a proactive stance towards the Coronavirus.

Trump, who had previously been criticized by media outlets for taking a relaxed view towards the virus, said in a speech yesterday that he will discuss payroll tax cuts with congress to soften the economic blow from the Coronavirus. Further, he intends to provide relief to any pay disruptions for hourly wage workers.

The markets have responded positively in pre-market trading with the S&P 500 recovering more than half of yesterday’s nearly 8% drop. The greenback has recovered a bulk of yesterday’s decline against a basket of currencies while gold prices turned to negative territory for the week after breaking to a fresh seven-year high yesterday.

Trump is expected to provide details in a press conference later today and the markets stand to continue pricing in optimism ahead of it.

EUR/USD rallied to highs not seen in over a year yesterday but has reversed a bulk of the gain after sellers stepped in slightly ahead of the 1.1500 level.

There is some euro data in the early day, but investors are likely to continue focusing on direction from government officials and central bankers on how they plan on dealing with the Coronavirus

Yesterday’s rally in EUR/USD was capped at two notable horizontal levels. The first is the psychological 1.1500 handle which held the price lower on an intraday basis.

The second level of interest falls at 1.1446 which is a level that was well-respected on a weekly chart between 2015 and 2016. EUR/USD held below this level on a daily close basis.

Today’s close will be important as the pair is on pace to post a reversal candlestick. This may signal a near-term top, especially since EUR/USD entered overbought territory on the rally yesterday.

Comments from Trump will be important. The markets will want to see a commitment from the government to confirm that all the weight of easing the economic fallout from the virus is not left to the Federal Reserve alone.

The next level of interest to the downside falls at 1.1285 which reflects Friday’s close. A decline to the level would serve to close the gap from this week’s open.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 1.15.

The projected lower bound is: 1.12.

The projected closing price is: 1.13.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 24 white candles and 25 black candles for a net of 1 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 62.0308. This is not an overbought or oversold reading. The last signal was a sell 1 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 65.29. 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 1 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 80. This is not a topping or bottoming area. The last signal was a sell 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 buy 11 period(s) ago.

Rex Takasugi – TD Profile

FOREX EUR= closed up 0.003 at 1.130. Volume was 91% below average (consolidating) and Bollinger Bands were 248% wider than normal.

Open     High      Low     Close     Volume___
1.128 1.131 1.128 1.130 6,331
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.12 1.10 1.11
Volatility: 15 9 7
Volume: 101,647 75,366 72,661

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 1.8% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 7 periods.

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