Euro: USD/EUR (EUR=X) upside fairly limited
The Euro to US Dollar exchange rate struggled to find direction during Tuesday’s session amid side-ways price action with the single currency last seen trading at $1.13210, up marginally.
Data-wise, Tuesday saw the latest Sentix Investor Confidence (Euro zone) fall sharply, printing in pessimistic territory at -3.3, in contrast to the expected +2.3 print with escalating concerns around global trade a key factor in dragging sentiment lower.
From the Sentix release: “As soon as the hopeful data of the sentix economic index had been published in May, the US president made a mistake in investors’ calculations… This development has pulled investors out of their upswing hopes and led to considerable setbacks in the sentix economic indices in all regions of the world. For the Euro zone, the overall index drops from 5.3 to -3.3 points.”
Meanwhile, US firms appear to have largely shrugged off growing trade concerns with the NFIB Small Business Index rising beyond expectations to register at a healthy 105.0.
“Optimism among small business owners has surged back to historically high levels, thanks to strong hiring, investment, and sales,” wrote NFIB president Juanita Duggan, adding “The small business half of the economy is leading the way, taking advantage of lower taxes and fewer regulations, and reinvesting in their businesses, their employees, and the economy as a whole.”
With central bank policy a hot topic in the current climate of trending towards easing, Wednesday’s speech from Draghi could hold some clues as to how the ECB plan to proceed. Official releases last week extended forward guidance with rates expected to stay on hold through H1 2020, however subsequent commentary from sources close to the ECB hinted that rate cuts could be on the cards.
“The EUR/USD rise stalled after the US-Mexico deal. Given the already dovish market pricing of the Fed and the lack of potential euro-positive catalysts this week (if anything, we see risks of the European Central Bank turning more dovish in coming months) EUR/USD upside is fairly limited from here,” wrote ING economists.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1.14.
The projected lower bound is: 1.12.
The projected closing price is: 1.13.
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 27 white candles and 23 black candles for a net of 4 white candles.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with FOREX EUR=), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
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 84.6655. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 10 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 64.67. 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 buy 213 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 123.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.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 6 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed up 0.002 at 1.133. Volume was 35% below average (neutral) and Bollinger Bands were 32% wider than normal.
Open High Low Close Volume___
1.131 1.134 1.130 1.133 79,820
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.12 1.12 1.14
Volatility: 6 5 7
Volume: 93,022 106,223 133,016
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 0.3% below 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 5 periods.