Morning Forex Review – Will Yesterday’s Moves Continue
Coming Up Today (all times GMT) GBP MPC Minutes (8:30) USD Existing Homes Sales (14:00) CAD BoC Policy Report (14:30) CAD BoC Press Conference (15:15) Forex pairs responded to the global rally in equities yesterday, as the dollar and yen sold off in favor of riskier currencies. Headlining the move was the AUDUSD which rose to a high of 1.0750, nearly 200 pips above its Monday lows. The question among Forex traders today is whether yesterday’s move has legs or was it the result of bargain hunting and short covering. As such, will be watching this morning’s lows; if they hold it could lead to another round of buying momentum today. EURUSD Taking advantage of the overall fall in the dollar yesterday, the EURUSD twice traded back above 1.4200 before settling around the 1.4150 level. Looking ahead, Forex traders will be watching the 1.4200 level closely.
EUR/USD Technical Analysis
EUR/USD had a very volatile day Tuesday, forming a massive doji as it was reported that the American government may be close to reaching a debt limit deal. The Euro itself has been mixed around the world on the day, and this pair probably reflects the USD news rather than anything Euro-related. We like selling, but need to see new lows at this point.
EUR/USD Daily Fundamental Analysis
The EUR/USD moved higher on Tuesday with the easing jitters in the market and the battered dollar on the back of the debt ceiling debate. Tuesday was a good day for the euro as the currency managed to unwind some losses on eased jitters and optimism that the leaders might be close to resolving the crisis and helping Greece to stem the contagion risk. The sentiment in the market was also supported by positive US housing data and unexpected in German ZEW current situation index for July, which eased fears on growth. The main support though for the sentiment was upbeat earnings that lifted stocks and eased the fears. On Wednesday, the focus will remain on the debt developments in the United States and the euro area as the summit nears in Brussels and the deadline for Congress approaches.
EUR/USD’s Technical Setup Ahead of the Eurozone
Forex Technical Update Prev: EUR/USD 1.42 Defended to Start Week (7/17) EUR/USD – The EUR/USD started this week bearish, but was supported in the US session. The market reached as low as 1.4015, cracking important pivot near 1.4030, but failing to sustain the break. This failure at least weakens the bullish scenario starting this week in a consolidation mode, with the market back to where it opened. – However, the inability of the RSI reading in the 1H chart to break below 30 suggests weak bears as well. Note that this is above 61.8% retracement of previous rally. – The bulls are weak too if they respect the opening gap guarded near 1.4130. – Therefore, as we gear up for the European session, the EUR/USD is in consolidation. Nothing exciting. Upside: – But, if we break above the current high at 1.4130, and close the gap, along with the 1H RSI reading breaking above 60 preferably tag 70, the bulls would be signaling
EUR/USD Technical Analysis
EUR/USD had another bearish day on Monday, as the world sold off the Euro. However, as the Americans do on almost every day, they bought up the Euro, and seem to be the only ones supporting it at the moment. In the meantime, we seem to be in a sell the Euro during Asian and Europe situation, while the Americans are reckless enough to buy it. The 1.40 area is vital, and a new low would be a very, very bad sign.
EUR/USD: 1.42 Defended to Start Week
Forex Technical Update Prev: EUR/USD Supported at 1.41, Targets 1.43, 1.4450 If US CPI is Subdued and Stress Tests Do Not Stir (7/15) EUR/USD – The EU stress test results were not great, but not as bad as anticipated neither. – However the 1.42 level was defended on Friday, and well defended to start the week as well, as the EUR/USD opened with a gap to the downside. – Getting deeper into the Asian session, the market is in a declining support. – The RSI in the 1H chart is breaking below 40, and killing the short-term bullish momentum we established last week. A reading below 30 returns the market to bearish momentum in the short-term. – The 4H chart shows that the momentum in the medium term is bearish, and remains so as the RSI reading failed to break above 60 last week. – Notice also the failure to break 61.8% retracement.
Euro/dollar had another roller coaster week, testing deeper waters. Apart from the ongoing debt crisis, there are quite a few indicators this week. Here is an outlook for these events, and an updated technical analysis for EUR/USD. After junking Portugal and Ireland, Spain and Italy may face credit rating downgrades as well. A default in Greece also seems more and more likely. If it is done in an orderly fashion, this could help the euro. Only 8 European banks failed the stress tests, and 16 other barely passed. Is this serious? The details will be crunched, and the stock market’s reaction in Europe on Monday could tell the true tale of the tests. EUR/USD chart with support and resistance lines on it. Click to enlarge: ZEW Economic Sentiment: Tuesday, 9:00. This is a highly regarded survey, especially the German edition.