Euro: USD/EUR (EUR=X) Lingers Near Critical Support

Euro: USD/EUR (EUR=X) Lingers Near Critical Support

Euro: USD/EUR (EUR=X) Lingers Near Critical Support

EUR/USD eased lower at the European open but remains within a range after a sharp push lower over the last two week.

The pair is down nearly 7% from a high posted early in the month and has recently broken to lows not seen since 2017.

The exchange rate saw a brief reprieve around the ECB meeting earlier this month but investors continue to pile into the greenback and liquidating risky assets such as stocks which is putting relentless pressure on the pair.

The dollar index (DXY) is on the verge of a technical breakout at this stage. It is trading at the same resistance level that previously held it lower at the start of 2017. If it were to rally above it, technical traders would view it as a bullish sign which is likely to accelerate the upward momentum for the dollar.

This could translate to a swift break to three-year lows in EUR/USD with an expected follow-through, possibly towards parity.

A meeting between the G20 takes place today to discuss the impact of the Coronavirus outbreak. Headlines stemming from the meeting stand to move the exchange rate over the near-term.

On Tuesday, PMI data will be released from several countries within the euro area. This data reflects a survey of managers in the manufacturing and services industry. The markets tend to react to it as it gives a good gauge of sentiment towards the economy. Especially considering fears surrounding the Coronavirus have escalated notably since the start of the month and as this data tends to be forward-looking.

Technical Indicators

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 1.10.

The projected upper bound is: 1.10.

The projected lower bound is: 1.06.

The projected closing price is: 1.08.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 26 black candles for a net of 3 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 19.9743. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 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 40.21. 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 sell 10 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 -94. This is not a topping or bottoming area. The last signal was a buy 0 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 0.008 at 1.080. Volume was 86% below average (consolidating) and Bollinger Bands were 185% wider than normal.

Open     High      Low     Close     Volume___
1.072 1.081 1.072 1.080 10,334
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.10 1.10 1.11
Volatility: 17 12 8
Volume: 131,049 89,621 75,791

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 2.5% below its 200-period moving average and is in an downward 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 bearish on EUR= and have had this outlook for the last 2 periods.

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