Euro: USD/EUR (EUR=X) rally was the result of persistent dollar’s weakness
The EUR/USD pair has retaken the 1.1000 threshold this Thursday, extending its intraday advance to 1.1044. The rally was the result of persistent dollar’s weakness, as the American currency edged lower against all of its major rivals, despite sentiment fluctuated throughout the day. Asian and European indexes closed in the red, but US indexes took notice of the latest Fed’s Chief Powell words and rallied.
The demand for dollars has declined as US governments have stepped up their efforts to combat the Coronavirus. The equity markets rallied sharply on Tuesday as the US was on the verge of approving a $2 trillion stimulus package. Although equities have lost some momentum since then as the markets await for the package to be voted through the House of Representatives.
The correlation between the dollar and equity markets will be important later on today as the US releases it’s weekly unemployment claims.
Markets usually don’t tend to react much to this report although today’s report is expected to accompany an unusual amount of volatility. The majority of analysts are expecting a sharp rise in claims and there is a fairly large range in terms of analyst estimates.
While a negative figure typically would be bad for the dollar, the markets may show the opposite reaction today. Investors have shown strong demand for the greenback while selling in other markets such as equities whenever things relating to the Coronavirus tend to look bad.
Short-Term Technical Outlook
The EUR/USD pair has broken above the 38.2% retracement of its latest daily decline at around 1.0960, now a relevant support level. The 4-hour chart shows that the 20 SMA continues to advance below the current level, with the price now also above the 200 SMA. Technical indicators eased just modestly after reaching overbought levels. Overall the risk is skewed to the upside, with the 50% retracement of the mentioned daily slump at 1.1065 providing immediate resistance.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 1.10.
The projected upper bound is: 1.13.
The projected lower bound is: 1.09.
The projected closing price is: 1.11.
A white body occurred (because prices closed higher 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 25 white candles and 24 black candles for a net of 1 white 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 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 88.1870. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 2 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 54.24. 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 13 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 23. This is not a topping or bottoming area. The last signal was a buy 3 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 8 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed up 0.004 at 1.107. Volume was 68% below average (consolidating) and Bollinger Bands were 166% wider than normal.
Open High Low Close Volume___
1.103 1.109 1.102 1.107 24,440
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.09 1.10 1.11
Volatility: 20 13 8
Volume: 131,469 94,487 76,921
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 0.1% 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 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.