EUR/USD: Euro sales continue

EUR/USD: Euro sales continue

21 October 2016, 10:42
Yuri Papshev

Trading recommendations

Sell ​​in the market. Stop-Loss 1.0920. Targets 1.0865, 1.0825, 1.0710, 1.0600

Buy Stop 1.0920. Stop-Loss 1.0880. Targets 1.0975, 1.1045, 1.1120, 1.1170


Technical analysis

In today's Asian session, the euro continued selling after yesterday's sharp weakening it on the comments from ECB President Mario Draghi. Draghi said that the ECB may extend the bond purchase program, and a sudden reduction QE in the euro area as recently reported in some media, will not.

At the beginning of the European session, market participants are picked up euro sales, pushing the EUR / USD pair to new 7-month lows.

Since the beginning of the month the EUR / USD has broken through and actively reduces critical support levels 1.1170 (EMA200 on the daily chart), 1.1120 (the lower bound of the range between the levels of 1.1285 (Fibonacci 23.6% retracement level of the last wave decline from 2014 highs) and 1.1120 (the low of September)). Also at the level of 1.1045 breached the lower boundary of another wider range between the levels of 1.1045 (Aug lows), 1.1350 (August highs). Support at 1.0975 (July low) is also broken, and the EUR / USD remains under pressure.

On the weekly chart the EUR / USD pair is reduced in the downlink with the lower boundary, passing near the support level of 1.0600 (November 2015 lows).

Indicators OsMA and Stochastic on the 4-hour, daily, weekly charts are on sellers side, on the monthly chart indicators also turned to short positions.

The EUR / USD remains under pressure from a strong fundamental background. Different directions Fed's monetary policy and the ECB will put pressure on the EUR / USD pair in the medium term. Reduce goals - 1.0710, 1.0600. Only when returning the pair above the 1.0975 level can be considered long positions with the targets at levels 1.1045, 1.1120. It was only after the breakdown level of 1.1170 is possible to revert to the medium-term positions to buy the pair EUR / USD.

Support levels: 1.0865, 1.0825, 1.0710, 1.0600

Resistance levels: 1.0915, 1.0975, 1.1045, 1.1120, 1.1170, 1.1205, 1.1285


The ECB left interest rates as expected at the same level (0% -0.4% and the deposit rate for commercial banks). At a subsequent press conference, ECB head Mario Draghi denied media reports that the central bank is considering the possibility of reducing asset purchase program. A sudden reduction in QE in the euro area will not be. Draghi also signaled that the ECB may extend the bond purchase program, which expires at the end of March 2017. Following statements by Mario Draghi and the ECB's decision not to change interest rates in the euro area fell significantly in the currency market. Strong sales of the pair EUR / USD - the most traded pair in the world - have led to the strengthening of the dollar against most currencies. The WSJ dollar index, which reflects the value of the US currency against a basket of 16 currencies, rose 0.5% to 88.36. 74% chance (according to the CME Group) that the Fed will raise rates in the United States in December, also contributes to the widespread strengthening of the dollar.

At the beginning of the European session, the euro sales continue, and the EUR / USD pair is on the 7-month low near the 1.0900 mark.

US dollar shows a large-scale strengthening against the background of increasing the probability of Fed rate in December to 74% from 69% the previous day. Strong economic data from the US and comments by the Fed more convincing market participants will soon raise interest rates in the United States. And it will contribute to strengthening of the US dollar in the currency market.

Author signals -

*)presented material expresses the personal views of the author and is not a direct guide to conduct trading operations.

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