Eur/usd - page 495
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The single currency lost value for a third consecutive session on Wednesday. The pair continued depreciating and lost 47 pips to a closing price of 1.1005, which is a new two-month low. Next target of the bears is the key support located at 1.1000/1.0990.
Yesterday the EURUSD fell again but this time with a narrow range and closed near the low of the day, in addition managed to close below the previous day low, which suggests a strong bearish momentum.
The pair continues to trade well below the 10, 50 and 200-day moving averages that should act as dynamic resistances.
The key levels to watch are: a daily resistance at 1.1237, the 10-day moving average at 1.1159 (resistance), a daily resistance at 1.1097, July swing low at 1.0952 (support) and a daily support at 1.0900.
EUR/USD: Looking Heavy; Turning Bearish Targeting 1.0825 N-Term
EUR/USD – BEARISH BIAS – (1.0825-1.1200)
The US dollar has regained upward momentum over the past week benefitting from the reduced likelihood that Donald Trump will become the next President. We believe that the market is now discounting little to no risk of Donald Trump becoming President. The appointment of Hillary Clinton as President would be welcomed initially by the market for providing more certainty over the outlook for US policies in particular for reducing the likelihood of trade disputes and higher government debt.
It should make the Fed more comfortable to resume rate hikes in December which is offering support for the US dollar in the near-term. The release of the latest US CPI and retail sales reports for September and a speech from Fed Chair Yellen will be in focus in the week ahead (all tomorrow), and are unlikely to materially change the perception that the Fed will raise rates in December. The US dollar is also deriving support from negative developments overseas.
We believe that the increased likelihood of a “harder Brexit” is beginning to weigh more on the euro. It poses increased downside risks for the outlook for growth in the euro-zone and could potentially prompt the ECB to maintain loose policy for longer. We expect President Draghi to downplay speculation that the ECB is considering tapering QE at their upcoming meeting.
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Yesterday the EURUSD initially fell but found enough support marginally above the 1.0970 to reverse and closed near the high of the day, however closed within the previous day range, which suggests being slightly on the bullish side of neutral.
The pair continues to trade well below the 10, 50 and 200-day moving averages that should act as dynamic resistances.
The key levels to watch are: a daily resistance at 1.1237, the 10-day moving average at 1.1140 (resistance), a daily resistance at 1.1097, July swing low at 1.0952 (support) and a daily support at 1.0900.
On Thursday the euro recovered from the losses during the last three sessions and emerged from the reached two-month low. The single currency added 50 pips to a closing price of 1.1055 after trading within 1.1057 and 1.0985. The pair is moving under the downward sloping moving averages, but RSI is no longer around extreme levels. Correction to 1.1105 should resume the downward direction.
EUR/USD forecast for the week of October 17, 2016
The EUR/USD pair fell rather significantly during the course of the week, slamming into the 1.10 level on the bottom. However, there is a significant amount of support in this area, so having said that it’s likely that we could bounce in the short-term. If we break down below the 1.09 level below though, the market should continue to go much lower. Any rally at this point in time should be a selling opportunity given enough time, as the market continues to prefer the US dollar overall, especially against the Euro.
EUR/USD Weekly Forecast October 17-21
A technical break was seen in EUR/USD in the past week as the pair broke below a rising channel that connects December lows with a spike low created during the UK vote. The break triggered a momentum-driven decline to the downside, with the currency pair closing the week near July lows for the largest weekly loss since the EU referendum.
The Federal Reserve delivered their latest monetary policy meeting minutes on Wednesday with a muted reaction in the financial markets. The Fed failed to provide a timeline for the next rate hike, with Fed member making a case for and against rate hike at the September meeting. The FOMC were generally content with the labor markets but presented some concerns in regards to inflation. Comments were made that the PCE price index has not been moving higher as forecasted despite the labor markets nearing what is viewed as full employment. Market Expectations for a rate hike in December remained largely unchanged following the meeting and has remained consistent throughout the week. The futures market indicate a 69.5% probability of rate hike at the end of the week, while November has essentially been ruled out with the odds at 8.3%.
US Data released on Friday came in positive with retail sales rising 0.6% and producer price index figures ticking up to 0.3% in September. The data, however, failed to have a sustained impact on the markets.
The latest COT data indicated a widening of $1.4 billion in the net short Euro position in the week to October 11, making the total net short among non-commercials $12.9 billion. Positioning in the Greenback increased by $3.3 billion for a net long of $16.6 billion. Euro positioning during the period indicated a widening in both long and short contracts.
In the upcoming week, inflation data out of the United States and the ECB meeting stand to drive volatility to the markets. A two-day EU economic summit takes place towards the end of the week.
The latest CPI data will be released on Tuesday, with an expectation for a further improvement in the figure. Last month’s data triggered volatility in the Dollar pairs, with a better than expected figure triggering a rally in the Greenback.
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