Euro: USD/EUR (EUR=X) Tipped To Rise As FED Powell Testifies

Euro: USD/EUR (EUR=X) Tipped To Rise As FED Powell Testifies

Euro: USD/EUR (EUR=X) Tipped To Rise As FED Powell Testifies

The Euro US Dollar (EUR/USD) exchange rate reached a two-week best over the course of Monday’s trading, with further gains possible according to some analysts.

“Fed Chairman Powell is headed to Capitol Hill tomorrow to testify before Congress” notes Kathy Lien, Managing Director of FX Strategy at BK Asset Management.

“His prepared comments on the economy and monetary policy will be released at 9:45AM NY / 14:45 GMT and they should drive EUR/USD, AUD/USD and NZD/USD higher. If the trade deal gives Powell a new sense of optimism, risk appetite will improve, lifting high beta currencies. If he remain cautious, stresses the need for patience, talks about the downside risks to growth and the possibility of fewer rate hikes, the US dollar will fall which should still be positive for EUR, AUD and NZD. USD/JPY on the other hand will rise on optimism and fall on pessimism.”

The start of the week saw the Euro US Dollar (EUR/USD) exchange rate slide, although the pairing managed to recover on Tuesday afternoon.

February’s German ZEW economic sentiment rose to a higher-than-forecast -13.4, however the current situation survey slipped from 27.6 to 15.

But the Euro was able to gain on the US Dollar as US President Donald Trump appeared to be more flexible on the US/China trade relationship this week.

When questioned on how likely it was the US would impose tariffs on Chinese goods on 1 March deadline, Trump responded:

‘‘I can’t tell you exactly about timing. The date is not a magical date because a lot of things are happening.’

The release of January’s FOMC minutes provided an upswing in support for the Dollar as while policymakers were divided over what it would take for them to raise interest rates, there was no discussion of cuts.

The end of last week saw that growth in the Eurozone remains muted due to the decline in manufacturing.

January’s flash Eurozone manufacturing PMI plummeted to a 68-month low of 49.2.

Manufacturing in the US also slipped, dipping to a 17-month low.

Despite this the US Markit composite likely buoyed the Dollar, and commenting on the flash PMI data, Associate Director at IHS Markit Tim Moore said:

‘Nonetheless, relatively strong domestic business conditions mean that US manufacturers remain on a much more positive trajectory than the recent downbeat production trends signalled by IHS Markit’s Manufacturing PMI surveys across Europe and Asia.’

It was confirmed on Friday that German GDP remained unchanged in Q4 2018, with growth stagnating at 0%.

The pairing rose on Friday afternoon on a spark of hope at the prospect of improving of US-China relations as President Trump and Liu He were due to wrap up trade talks.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.15.

The projected lower bound is: 1.12.

The projected closing price is: 1.14.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 4 black candles for a net of 1 white candles. During the past 50 bars, there have been 24 white candles and 25 black candles for a net of 1 black candles.

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 75.5815. This is not an overbought or oversold reading. The last signal was a buy 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 49.68. 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 138 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 108.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 7 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 buy 3 period(s) ago.

Rex Takasugi – TD Profile

FOREX EUR= closed down -0.000 at 1.135. Volume was 91% below average (consolidating) and Bollinger Bands were 8% wider than normal.

Open High Low Close Volume___
1.136 1.137 1.135 1.135 13,633

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 1.13 1.14 1.15
Volatility: 4 8 8
Volume: 130,665 140,062 144,289

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 1.4% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 14 periods.

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