Euro: USD/EUR (EUR=X) eurozone economic sentiment fell to its lowest level in more than two years

Euro: USD/EUR (EUR=X) eurozone economic sentiment fell to its lowest level in more than two years

Euro: USD/EUR (EUR=X) eurozone economic sentiment fell to its lowest level in more than two years

The actual release outperformed the forecast by 0.1%. Spanish flash GDP figure exceeded estimates too. Even Italian data was quite promising – prelim GDP level was placed at 0.2% against -0.1% forecast. German prelim CPI level beat the forecast by 0.5%. Sound good but the long-term picture may be not that shiny.

On May 7, the European Commission published its economic forecasts*. According to them, the European economy will keep suffering during 2019 with a rebound in 2020 only. The GDP growth is anticipated to be at 1.2% comparing to 1.9% in 2018. Unemployment rate should stay at 7.7%. This figure is better than previous ones but not the best. Summary budget deficit in the eurozone is expected to rise to 0.9% of GDP. Although debt of the eurozone will likely decrease, it’s not enough to boost the euro.

In April, eurozone economic sentiment fell to its lowest level in more than two years. What more negative for the European currency is a prediction of low inflation levels both in 2019 and 2020 that is below the ECB’s targets.  

Moreover, we should remember about the external factors that will be adding pressure during the year. Trade wars leading to the weakness in emerging markets, especially in China. The Brexit deal that is constantly prolonged may end with a no-deal at all.

All factors mentioned above are signs of the weak EUR.

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 1.13.

The projected upper bound is: 1.13.

The projected lower bound is: 1.11.

The projected closing price is: 1.12.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

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 57.7923. This is not an overbought or oversold reading. The last signal was a buy 8 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 45.63. 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 190 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 15. This is not a topping or bottoming area. The last signal was a buy 8 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 3 period(s) ago.

Rex Takasugi – TD Profile

FOREX EUR= closed up 0.001 at 1.120. Volume was 94% below average (consolidating) and Bollinger Bands were 4% narrower than normal.

Open High Low Close Volume___
1.119 1.120 1.119 1.120 7,613

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

Moving Averages: 10-period 50-period 200-period
Close: 1.12 1.13 1.14
Volatility: 3 6 7
Volume: 95,866 124,721 137,406

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% 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 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 12 periods.

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