Euro: USD/EUR (EUR=X) ECB interest rates likely to stay low in Europe

Euro: USD/EUR (EUR=X) ECB interest rates likely to stay low in Europe

Euro: USD/EUR (EUR=X) ECB interest rates likely to stay low in Europe

The Euro may have rebounded during recent sessions but the outlook from a fundamental perspective remains decidedly uninspiring as the European Central Bank (ECB) appears to jettison its previous plan to withdraw the crutch of crisis-era easing. 

The Euro has climbed back up to 1.1300 against the U.S. Dollar over recent sessions, having made new yearly lows in the 1.11s, but the main problem for those hoping for a sustained rebound remains the persistently low core inflation rate and economic growth in the Eurozone.

“After years of stimulus, years of negative interest rates, that we are still in a conundrum on growth is a bit puzzling,” says Jean Raby, CEO of Natixis Investment Managers. “The downgrade of growth from 1.7% to 1.1% in 2019 is kind of an eye-opening, that said, it may simply mean, we will be in a growth environment that is going to be slower in Europe, for longer, and right now, I think, most market observers do not expect any start of normalisation of interest rate policy in 2019.”

Interest rate policy matters as the promise for higher interest rates at a central bank in the future tends to support a currency, while expectations for unchanged, or lower rates, tends to weigh on a currency.

The Euro was seen under pressure last week as the ECB confirmed it would no longer raise interest rates in the Autumn of 2019 and would prefer a delay to last until at least year-end.

Economists at the Frankfurt-based institution meanwhile revealed a series of swingeing cuts to inflation and economic growth forecasts.

A break below the 1.1175 level would probably be critical in reasserting the bearish case in this sense.

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 1.14.

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 5 white candles and 4 black candles for a net of 1 white candles. During the past 50 bars, there have been 24 white candles and 24 black 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 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 69.2306. This is not an overbought or oversold reading. The last signal was a buy 2 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 50.83. 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 149 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 -4. This is not a topping or bottoming area. The last signal was a buy 1 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 5 period(s) ago.

Rex Takasugi – TD Profile

FOREX EUR= closed up 0.005 at 1.133. Volume was 9% above average (neutral) and Bollinger Bands were 5% narrower than normal.

Open High Low Close Volume___
1.129 1.134 1.128 1.133 158,815

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

Moving Averages: 10-period 50-period 200-period
Close: 1.13 1.14 1.15
Volatility: 8 7 8
Volume: 143,221 148,733 143,796

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 1.4% below its 200-period moving average and is in an downward trend. Volatility is 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 4 periods.

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