Euro: USD/EUR (EUR=X) Failed Rally Could Trigger Pull-back into 1.0916 – 1.0883
The Euro rose against the U.S. Dollar on Friday as investors continued to increase bets on a sooner-than-expected rate cut by the U.S. Federal Reserve. The European Central Bank (ECB) is also expected to make a rate cut later in the year, but since U.S. rates are higher than Euro Zone rates, the greatest impact by the move will be on the greenback.
The idea that the Fed would cut rates was supported by dovish comments from Fed Chair Jerome Powell on Friday. He said the central bank will “act as appropriate” to support the economy in the face of risks posed by the coronavirus outbreak, though he said the economy remained in solid condition. Traders read this to mean the central bank could cut rates as soon as its March meeting.
The Euro’s gains may have been limited by a report that showed long-term Euro Zone inflation expectations fell to a record low as concerns about the spread of coronavirus intensified.
In other news, volatility in the Euro-dollar exchange rate surged to its highest in more than a year on Friday, as growing fears over a coronavirus outbreak raised recession fears and fuelled big currency moves.
Daily Technical Analysis
The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through 1.1095 will change the main trend to up.
A trade through 1.0778 will signal a resumption of the downtrend. This is highly unlikely but the EUR/USD will be up seven sessions from its most recent main bottom on Monday, which will put it inside the window of time for a closing price reversal top.
The first main range is 1.1239 to 1.0778. Its retracement zone at 1.1007 to 1.1062 is currently being tested.
The second main range is 1.1413 to 1.0778. Its retracement zone at 1.1096 to 1.1170 is the next potential upside target.
The short-term range is 1.0778 to 1.1053. Its retracement zone at 1.0916 to 1.0883 is the first potential downside target and support area.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 1.10.
The projected upper bound is: 1.11.
The projected lower bound is: 1.09.
The projected closing price is: 1.10.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 2 black candles for a net of 5 white candles. During the past 50 bars, there have been 24 white candles and 25 black candles for a net of 1 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.
The projected closing price is: 1.10.
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 94.5560. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 6 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 63.46. 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 6 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 186.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 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 4 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed up 0.003 at 1.105. Volume was 98% below average (consolidating) and Bollinger Bands were 61% wider than normal.
Open High Low Close Volume___
1.100 1.105 1.100 1.105 1,210
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.09 1.10 1.11
Volatility: 7 6 6
Volume: 78,331 64,065 72,164
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 0.4% below 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 0 periods.