Euro: USD/EUR (EUR=X) dropped a tad below 1.1200 in the wake of the EU elections

Euro: USD/EUR (EUR=X) dropped a tad below 1.1200 in the wake of the EU elections

Euro: USD/EUR (EUR=X) dropped a tad below 1.1200 in the wake of the EU elections

Center-right and center-left parties have lost their majority in the EU elections, but the votes did not all go to populist parties as some had feared. Centrist liberal and green parties have gained ground as well, and the result is a fragmented EU Parliament. Far-right parties have won in France and Italy, but traditional mainstream parties dominated Germany and Spain.

The outcome has allowed the euro to hold its ground around 1.1200, awaiting further political reactions and the return of liquidity — both the US and the UK are on holiday today.

Among the main countries, political developments in Germany may make a difference for the euro. The center-left SPD came out third, lagging behind both Angela Merkel’s center-right CDU and the Greens. The beaten socialists may come to a conclusion that they have been punished for forming part in Merkel’s grand coalition and retire — perhaps triggering the Chancellor’s resignation.

Merkel has already stepped down from leading her party and plans to stay until the next national ballot in 2021. However, a breakdown of her government may bring her reign to an end. The long-serving leader is seen as a beacon of stability and centrism. Annagret Kramp-Karenbauer (AKK) which took over as CDU leader, tacks to the right and may find it impossible to govern. The prospects of fresh elections followed by prolonged negotiations in the largest economy may weigh on the common currency.

Outside Europe, US President Donald Trump is visiting Japan and has commented on China, saying that the world’s largest economies will eventually have a deal some time in the future, but the US is not ready to reach an agreement with China at the moment. His mixed messages do not improve the market mood.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.13.

The projected lower bound is: 1.11.

The projected closing price is: 1.12.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black candles.

An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend (which appears to be the case with FOREX EUR=). It then signifies that the momentum may be shifting from the bulls to the bears.

If the engulfing bearish pattern occurs during a downtrend, it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.

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 83.9509. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 3 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 48.40. 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 203 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 9. This is not a topping or bottoming area. The last signal was a buy 2 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 2 period(s) ago.

Rex Takasugi – TD Profile

FOREX EUR= closed down -0.000 at 1.119. Volume was 97% below average (consolidating) and Bollinger Bands were 56% narrower than normal.

Open High Low Close Volume___
1.120 1.120 1.119 1.119 3,970

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 1.12 1.12 1.14
Volatility: 3 5 7
Volume: 84,885 114,152 134,699

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 1.7% below its 200-period moving average and is in an downward 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 bearish on EUR= and have had this outlook for the last 5 periods.

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