Euro: USD/EUR (EUR=X) ECB and Fed signalled the possibility of rate cuts ahead
Major global central bankers sang a chorus of dovishness last week. Most importantly, both ECB and Fed signaled the possibility of rate cuts ahead. Comparatively, RBA’s indication of more rate cut was not much a surprise. In the background, it appeared US and China were back on track to restart trade negotiations.
Hope of more monetary easing and trade optimism lifted S&P 500 to record intraday high. On the other hand, treasury yields tumbled with US 10-year yield breaching 2% handle while German 10-year yield hit record low. Gold surged on Dollar’s selloff and breached 1400 handle. WTI crude oil extended recent rebound and closed above 57 on middle east tensions.
Dollar ended the week as the worst performing currency, followed by Australian Dollar, on expectations of rate cuts by respective central banks. Yen ended as the third weakest, reacting more to rising stocks than falling yields. Swiss Franc was the strongest one, on geopolitical tension safe haven flow, followed by Kiwi.
Surprisingly, Euro was the third strongest as markets pushed back rate cut expectations after Eurozone PMI data. It’s not impossible for Dollar to stage similar comeback if there would be some positive developments.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1.15.
The projected lower bound is: 1.13.
The projected closing price is: 1.14.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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 74.7826. This is not an overbought or oversold reading. The last signal was a buy 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 63.96. 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 221 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 132.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 7 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 0 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed up 0.008 at 1.137. Volume was 37% below average (neutral) and Bollinger Bands were 39% wider than normal.
Open High Low Close Volume___
1.129 1.138 1.128 1.137 72,791
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.13 1.12 1.14
Volatility: 7 6 7
Volume: 71,549 97,168 130,589
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 0.1% 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 13 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.
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