Euro: USD/EUR (EUR=X) Fed Minutes to Guide the Dollar

Euro: USD/EUR (EUR=X) Fed Minutes to Guide the Dollar

Euro: USD/EUR (EUR=X) Fed Minutes to Guide the Dollar

The greenback is gaining some upward momentum in early day trading on Wednesday. Whether it will sustain this move is likely to be determined by the minutes from the last Fed meeting which will be released later in the day.

I’m noticing something a bit peculiar in the markets. At the last Fed meeting, the Fed signaled that it would likely take a bit of a pause after cutting rates three times earlier this year. What I find a bit odd is that the markets are on the same page.

According to the CME FedWatch tool, the markets are pricing in no chance of a rate cut by the end of the year. The reason I find this unusual is that the markets have consistently priced in more easing than the Fed led on it intended to deliver. This is dating back to before the first rate cut, even when the Fed was communicating it was staying on course.

In the end, the money markets did a good job foreseeing the risks and correctly identified the Fed’s course of action. So I will respect that the markets don’t see another cut coming over the near-term. At the same time, I will be watching the odds of a January rate and how that figure fluctuates from now until after today’s Fed meeting. It currently shows about an 18% chance of another cut in January.

Technical Analysis

EUR/USD has turned lower after failing to take out some major resistance. This resistance comes from a horizontal level and the 20-day moving average. The 100-day moving average, although not tested, was also within proximity of this week’s high.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.12.

The projected lower bound is: 1.10.

The projected closing price is: 1.11.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.

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 82.2006. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 4 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 51.04. 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 56 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 10. This is not a topping or bottoming area. The last signal was a buy 4 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 0 period(s) ago.

Rex Takasugi – TD Profile

FOREX EUR= closed down -0.001 at 1.107. Volume was 10% below average (neutral) and Bollinger Bands were 12% narrower than normal.

Open     High      Low     Close     Volume___
1.108 1.108 1.105 1.107 69,734
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.10 1.10 1.12
Volatility: 3 5 6
Volume: 64,460 71,792 94,872

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 1.0% 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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