Euro: USD/EUR (EUR=X) rallies in the early week will continue to be met with sellers
Friday’s jobs report sent a message to the markets that the Fed is not in a hurry to ease monetary policy. Much of the rally in EUR/USD in June was predicated on the speculation that the Fed was sure to cut rates this month. Not only that, the markets were significantly pricing in 50 basis points in cuts.
These odds have dropped notably alongside EUR/USD. The futures markets no longer have much expectation of a 50 basis point cut but are still fully pricing in a 25 basis point cut.
In this context, Fed chair Powell’s testimony later this week will be important. The decline in rate cut expectations has taken the wind out of the earlier rally. Perhaps the prospect of significant easing measures in the near-term are off the table, but EUR/USD bulls will be looking for a broader term outlook to validate the bullish bias.
I do still think EUR/USD has some bullish potential despite the rather horrible technical outlook. The reason being is that the exchange rate trades near a multi-year low. Currently, I don’t think the fundamental backdrop is aligned for a technical breakdown.
I expect that last weeks decline has wiped out a lot of bullish positions. As the momentum remains strongly to the downside, I think that rallies in the early week will continue to be met with sellers.
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 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 25 white candles and 25 black candles.
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 10.0520. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 8 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 41.91. 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 233 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 -124.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 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 5 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed up 0.000 at 1.122. Volume was 99% below average (consolidating) and Bollinger Bands were 32% wider than normal.
Open High Low Close Volume___
1.121 1.122 1.121 1.122 1,290
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.13 1.12 1.13
Volatility: 5 6 7
Volume: 64,130 86,296 126,237
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 1.0% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. 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 0 periods.
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