FX traders can find clues on the EUR/USD outlook from the FX options market, given its forward-looking nature and focus on volatility and direction.
Implied volatility gauges future actual volatility and is key to option premiums – it’s higher in very short-dated expiry options, highlighting the volatility risk from Federal Reserve Chairman Jerome Powell’s opening speech at the Jackson Hole symposium on Thursday .
However, one- to 12-month implied volatility is falling this week, highlighting the lack of actual volatility and inability of EUR/USD to break from recent ranges or extend recent and two-year highs. Benchmark one-month implied volatility is 7.7 from 8.0 this week, still well above mid-August lows at 7.1.
Risk reversal contracts show implied volatility premium for EUR calls over puts (topside) has eased from multi year highs, but remains strong, especially in medium-longer term contracts, suggesting dealers still see more risk of EUR/USD gaining than falling.
Euro/US Dollar Exchange Rate
Today’s Forex Rates
Euro/US Dollar FX Polls
Overall, the bias in prices is: Upwards.
The projected upper bound is: 1.20.
The projected lower bound is: 1.17.
The projected closing price is: 1.18.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 32 white candles and 17 black candles for a net of 15 white candles.
An inverted hammer occurred. If this occurs during a downtrend it implies a reversal. Look for a confirmation of the reversal on the bar.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
A shooting star occurred (a shooting star has a small real body near the bottom of the candle and a long upper shadow). During an uptrend(which appears to be the case with FOREX EUR=) the long upper shadow indicates that the bears are gaining control and a top may occur.
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 50.3283. This is not an overbought or oversold reading. The last signal was a sell 6 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 58.57. 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 6 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 27. This is not a topping or bottoming area. The last signal was a sell 6 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 13 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed down -0.000 at 1.183. Volume was 86% below average (consolidating) and Bollinger Bands were 50% narrower than normal.
Open High Low Close Volume 1.183 1.185 1.183 1.183 15,224
Technical Outlook Short Term: Neutral Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 1.18 1.16 1.12 Volatility: 7 7 9 Volume: 89,374 103,640 95,583
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 6.0% above its 200-period moving average and is in an upward trend. Volatility is low 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 bullish on EUR= and have had this outlook for the last 31 periods.