Euro: USD/EUR (EUR=X) seen finding support on charts at 1.0778 this week
The Euro unwound almost all of its late March rebound against the Dollar last week and the charts are warning of more losses ahead, although weekend confirmation of a broad slowdown in the continental spread of coronavirus could lift risk appetite over the coming days and possibly the Euro-to-Dollar rate too.
Europe’s single currency fell more than three percent last week, the most significant move to the downside since all of about a fortnight ago but not quite as large as the 4.5% gain seen in the prior week. The significant-but-also-insignificant price action last week is testament to the scale of the step-up in volatility seen through March, a boon for trading and hedging oriented businesses long starved of volatility beforehand, but a potentially perilous development for those exposed to exchange rate risk.
“EUR/USD has swung wildly with the average intra-day high/low range over the last four weeks amounting to nearly 5 big figures. The move this week, captured in that average, is smaller – at 380 pips underlining the impact of the actions taken by the Fed and other central banks to bring the financial markets back to normal trading conditions. But despite the added sources of USD liquidity the dollar remains very well supported and the short-term direction remains to the downside for EUR/USD,” says Derek Halpenny, head of research, global markets EMEA and international securities at MUFG.
Losses for the Euro were exacerbated by investor exasperation with the the lack of a common solution from politicians and policymakers stood behind the common currency, to the economic fallout of the coronavirus crisis. National governments have pulled out all of the stops in order to plug the hole they themselves have punched into the side of their economies with actions to slow the spread of coronavirus, actions taken with a view to preventing health systems from being overloaded to the point of collapse.
Last week’s price action has left the Euro-to-Dollar rate on course for a return to the 1.0778 mid-February low, which is now expected to provide support to the exchange rate if it is actually seen in the early days of the new week. The response of investors to the latest coronavirus infection and fatality numbers released in Europe and the U.S. over the weekend will be the first and foremost drivers of price action in the coming days while these afore and latter mentioned technical factors mark the likely price confines.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 1.10.
The projected lower bound is: 1.06.
The projected closing price is: 1.08.
A white body occurred (because prices closed higher 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 25 black candles for a net of 1 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 12.2199. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 3 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 42.15. 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 19 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 -48. This is not a topping or bottoming area. 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 1 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed up 0.001 at 1.082. Volume was 88% below average (consolidating) and Bollinger Bands were 100% wider than normal.
Open High Low Close Volume___
1.081 1.082 1.080 1.082 10,208
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.09 1.10 1.11
Volatility: 15 13 8
Volume: 119,206 102,604 78,601
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 2.3% 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 2 periods.