USD/EUR (EUR=X) ECB Not Likely A Big Event
The main event for the Euro in the week ahead is the conclusion of the policy meeting of the European Central Bank (ECB) on Thursday at 12.45 B.S.T.
In June the ECB signalled it would be tapering its quantitative easing (QE) programme with a view to to ending QE altogether by the end of 2018 and many analysts see a good chance that it will reduce the volume of monthly asset purchases (probably from 30bn to 15bn) at the meeting this Thursday.
If it does it should provide the Euro with a boost, as it will confirm the ECB’s roadmap to normalisation; if it doesn’t it could weigh on the single currency.
A recent run of poor data – especially from Germany – and a surprise fall in inflation, coupled with increased political risk from Italy are major headwinds which threaten to derail the ECB’s plans to curtail QE, and a taper on Thursday is not a ‘done deal’.
Most major bank analysts, however, still appear to expect the ECB to remain on track to taper and not all recent data out of Europe has been poor, as evinced by the Eurozone PMI for August which in the end met expectations on their final revision.
Analysts at Wells Fargo don’t see a change in policy happening at the September meeting.
“In our view, the ECB is unlikely to provide many new signals at its policy announcement next week, particularly given ongoing concerns around Italy and global trade. Instead, we believe it is more important to monitor the incoming European data flow for clues on whether the ECB might deviate from the policy schedule it laid out at its June announcement,” say Wells Fargo.
The other main release for the Euro is ZEW economic sentiment in August, out at 10.00 on Tuesday.
The ZEW index showed a fall to -11.1 in July, the third negative reading in a row – an unusual run of bad data for the indicator.
The index is based on the balance of survey responses from 350 German financial experts and is considered a fairly reliable forward indicator for broader economic growth int eh region, so another negative reading could weigh on the Euro.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1.17.
The projected lower bound is: 1.14.
The projected closing price is: 1.15.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white 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.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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 33.2553. This is not an overbought or oversold reading. The last signal was a sell 7 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 46.27. 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 17 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 -115.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 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 sell 1 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed unchanged at 1.155. Volume was 98% below average (consolidating) and Bollinger Bands were 18% wider than normal.
Open High Low Close Volume___
1.156 1.156 1.155 1.155 2,300
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.16 1.16 1.19
Volatility: 6 8 9
Volume: 123,196 140,478 133,251
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 3.3% below 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 9 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.
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