Euro: USD/EUR (EUR=X) Prepares for Uptrend after ABC Flat Correction
The Euro rapidly rose to levels not seen in more than a year at the open this week but has eased lower to pare gains and to close the weekly gap. The session ahead might see EUR/USD holding within a range, ahead of tomorrow’s ECB meeting.
ECB President Lagarde has warned of the dangers the Coronvirus can have on the economy and has expressed the desire to take action. Most analysts, however, think there is little the central bank can do as its interest rate is already in negative territory.
While the ECB rarely talks about the exchange rate these days, the rapidly rising euro is not making the bank’s job any easier. The rise in the euro has been so unusual that it has had some pondering whether the single currency has become a safe-haven currency.
EUR/USD does appear to have a strong inverse correlation with the equity markets. Both instruments turned at the same time in late February and both have seen similar momentum since.
I personally don’t think the euro has turned into a safe-haven. Rather, I think the currency is being faced with an urgency by short-sellers to cover their positions in the wake of a drastic shift in risk sentiment. Further, with the Fed cutting rates, the “carry trade appeal”, associated with the euro for several years now, has diminished.
The ECB will have an opportunity to shift the market’s perception of the euro, and potentially decouple EUR/USD from its inverse correlation with the equity markets. But as most analysts have suggested, they are not in a position to do much with the interest rate and will probably need to be very creative at their meeting tomorrow.
Aside from the upcoming ECB meeting, traders will also be keeping an eye out for further developments in the United States. President Trump has hit a roadblock in pushing through fiscal stimulus but is expected to continue his efforts for a payroll tax cut.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 1.14.
The projected lower bound is: 1.11.
The projected closing price is: 1.13.
A black body occurred (because prices closed lower 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 23 white candles and 26 black candles for a net of 3 black candles.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
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 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 59.3858. This is not an overbought or oversold reading. The last signal was a sell 1 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 63.67. 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 1 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 81. This is not a topping or bottoming area. The last signal was a sell 0 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 11 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed down -0.000 at 1.127. Volume was 89% above average (neutral) and Bollinger Bands were 244% wider than normal.
Open High Low Close Volume___
1.128 1.137 1.126 1.127 129,072
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.12 1.10 1.11
Volatility: 15 9 7
Volume: 113,921 77,821 73,274
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 1.6% above 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 7 periods.