Euro: USD/EUR (EUR=X) Focus Shifts Away from US Monetary Policy this Week
Last week, EUR/USD saw some rather volatile swings as several Fed members shared views on their latest stance. So far, a majority of FOMC members do appear to favor easing policy next week.
The notable exception was Fed member Rosengren who stated he would rather wait to take action. This caused a sharp drop in EUR/USD and a general jump in volatility across asset classes on Friday.
This week, the markets will shift focus to the European Central Bank as they are scheduled to meet on Thursday.
At their last meeting, the ECB surprised the markets by taking a more hawkish than expected stance. Indeed, they pushed back their plans for raising interest rates, but the fact that they are still considering tightening is against the grain when compared to other major economies.
Since then, speeches from ECB President Draghi have indicated that the European is moving towards a more dovish stance. Thursday’s meeting will reveal exactly how far they’ve come.
Up until now, the markets have largely focused on the Fed. I expect that this will fade in the week ahead. Not only because of the upcoming ECB meeting, but also as Fed members have entered a blackout period where they will not be speaking or conducting interviews.
This may not last too long. On Friday, the latest GDP data will be released from the US. This is the last important, or rather influential, piece of data from the United States before the central bank meeting.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1.13.
The projected lower bound is: 1.11.
The projected closing price is: 1.12.
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 24 white candles and 26 black candles for a net of 2 black candles.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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 16.2701. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 9 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 43.49. 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 243 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 -100.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 9 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 sell 15 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed down -0.000 at 1.121. Volume was 98% below average (consolidating) and Bollinger Bands were 4% wider than normal.
Open High Low Close Volume___
1.121 1.121 1.120 1.121 1,805
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.12 1.12 1.13
Volatility: 6 6 7
Volume: 68,863 79,531 123,676
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 0.9% 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 moderate flows of volume out of EUR= (mildly bearish). Our trend forecasting oscillators are currently bearish on EUR= and have had this outlook for the last 10 periods.
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