USD/EUR (EUR=X) Rate Seen Straitjacketed by Italy this Summer but Better Days are Ahead Later in 2018
EUR/USD will be restrained this summer by political risks in Italy.
But can rise in second half of 2018 as ECB ends QE programme.
Although forecasts suggest upside is more limited than before.
The Euro-to-Dollar rate will be strait-jacketed this summer months due to lingering unease over the new Italian government’s economic agenda, according to multiple strategists, but it can recover nicely later in 2018 once Italy’s draft 2019 budget has been agreed with Brussels and the European Central Bank ends its quantitative easing programme.
Europe’s single currency has stabilised in recent days following weeks of heavy losses, brought about by a resurgent US Dollar and fears over the new Italian government’s commitment to the Euro, which pushed EUR/USD to a near-year-long low of 1.1515 at the end of May.
This downward move prompted J.P. Morgan strategists to lower their forecasts for the Euro-to-Dollar rate last week although, and while the currency is not quite out of the woods just yet, buyers of the exchange rate need not give up hope of better rates to come later in 2018.
The forecast for a rise to 1.20, however, is conditional on the Eurozone economy recovering from the first-quarter lull that pushed GDP growth down from 0.7% at the end of 2017 to 0.4% for the first-quarter of 2018.
It is also hinged on the assumption that the European Central Bank bites the proverbial bullet and finally winds down the quantitative easing programme that has seen it hoovering up tens of billions of European bonds each month ever since early 2015. Markets are looking for the ECB to signal an end to the QE programme in its latest monetary policy statement, due this Thursday.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1.19.
The projected lower bound is: 1.16.
The projected closing price is: 1.18.
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 23 white candles and 27 black candles for a net of 4 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 49.1330. This is not an overbought or oversold reading. The last signal was a sell 4 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 49.08. 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 11 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 82. This is not a topping or bottoming area. The last signal was a sell 2 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 9 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed up 0.000 at 1.179. Volume was 97% below average (consolidating) and Bollinger Bands were 21% narrower than normal.
Open High Low Close Volume___
1.179 1.179 1.179 1.179 4,280
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.18 1.20 1.20
Volatility: 5 7 8
Volume: 141,363 135,226 123,051
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 1.8% below its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 3 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.
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