Eur/usd - page 525
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The NFP data showed weaker than expected numbers and the EUR/USD pair immediately was seen uplifted. The pair marked high at 1.0622 but shortly afterwards retreated as focus was set on the increase on wages. The current market price is 1.0533.
EUR/USD Weekly Forecast January 9-13
Political uncertainty has dominated the Dollar since the new year, evident from both a technical and fundamental perspective. While volatility increased substantially in the past week, a clear directional bias appears to be lacking for the Greenback. There has been a small rebuild in the aggregate Dollar long position after some long covering through the middle of December, but the latest COT report continued to point to a lack of urgency in positioning short the Euro, after a substantial reduction in net short positioning in December. A political catalyst is likely required to reestablish trends, and in the absence of a clear driver, Dollar rallies will tend to remain at risk.
EUR/USD pushed lower in the early week to marginally break the 2016 low but losses were not sustained and a momentum driven rally took the pair near the spike high posted in last week of December, ahead of the US jobs report. The range environment in the Greenback appears more visible in the US Dollar index (DXY) as a slight divergence has been playing out. The Dollar decline on Thursday took the index below the spike low posted in December while the EUR/USD rally stopped ahead of the equivalent spike high. Stop losses were likely triggered on both sides in the past week with the index briefly taking out the prior week’s highs and lows. Friday’s jobs figures elicited a sharp turn higher in DXY, resulting in a weekly doji print and a daily bullish engulfing candle. While the technicals signal short-term bullish potential, there is little reason to believe that economic data from the United States in the past week will spur a longer term rally, in continuation of the predominant uptrend in the Greenback.
The Federal Reserve released minutes from their December monetary policy meeting on Wednesday. The central bank had surprised markets last month by raising their forecast for 2017. The meeting minutes, however, revealed the amount of uncertainty the Fed was facing with a new President taking office. The markets have shown a high level of conviction that Trump policies will benefit the United States with a sharp rally in equities and the US Dollar since the election, but the Federal Reserve did not share the same enthusiasm. There was a clear division among policymakers as only half of the members revised their 2017 forecasts to reflect economic improvements based on the anticipated stimulatory fiscal policy expected from the new administration. On balance, the risk to a more rapid pace of tightening appeared to be more of a concern as compared to downside risks but further political clarity will equip the central bank to provide a higher degree of certainty in policy forecasting.
Price action since November has shown that the markets are putting more importance on politics than the central bank and with the Fed communicating how important political developments will be to monetary policy, the reaction from Friday’s jobs report was somewhat muted.
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On the last Friday’s session the EURUSD initially rose but found enough resistance at 1.0622 to reverse and closed near the low of the day, although the currency pair managed to close within Thursday’s range, which suggests being slightly on the bearish side of neutral.
The currency pair continues to trade above the 10-day moving average that should act as a dynamic support but remains to trade below the 50 and the 200-day moving averages that should act as dynamic resistances.
The key levels to watch are: a Fibonacci extension at 1.0666 (resistance), a daily resistance at 1.0622, the 10-day moving average at 1.0483 (support), a daily support at 1.0462 and the 2017 low at 1.0340 (support).
On yesterday session, the EURUSD rose with a narrow range and managed to close near the high of the day, although closed within Friday’s range, which suggests being slightly on the bullish side of neutral.
The currency pair continues to trade above the 10-day moving average and managed to close above the 50-day moving average both should act as a dynamic supports but remains trading below the 200-day moving average that should act as dynamic resistance.
The key levels to watch are: a daily resistance at 1.0819, a Fibonacci extension at 1.0666 (resistance), a daily resistance at 1.0622, the 50-day moving average at 1.0578 (support), the 10-day moving average at 1.0503 (support) and a daily support at 1.0462.
EUR/USD Runs into Resistance
Although EUR/USD is higher in today’s trading, the pair has backed off from a test of first resistance at last week’s high. After rising to 1.0627, EUR/USD reversed to the downside and is now trading at 1.0585, up 0.10% from Monday’s North American close.
In today’s session, the only economic release out of the Eurozone is French Industrial production, which came in at 2.2% versus expectations of a reading of 0.6%. In the U.S., the JOLTS Job Openings and Wholesale Inventories are due at 10:00 ET. Given that these are all low impact reports, EUR/USD could play out the session consolidating below first resistance.
On the downside, support is at Monday’s 1.0508 low, which represents a test of the January 2nd high. On a drop below this level, the target becomes the January 3rd low 1.0340.
Should U.S. rates continue to correct along with the dollar, EUR/USD could make another attempt to push higher. On a move above last week’s high, the next resistance is at the December 30th high at 1.0653, which represents a test of the highs established December 13/14. On a move above this level, the target becomes 1.0700.
However, with the broader downtrend in EUR/USD still intact, resistance in play and the Stochastic indicator near overbought levels, the probabilities favor sideways to downside price action in today’s session.
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Following the moderate momentum from yestreday, the EUR/USD pair marked a daily high at 1.0626 earlier today. The pair failed to hold on that line and moved lower to currently trade at 1.0565. Immediate support is located at 1.0550 and should the pair cross it, 1.0500-1.0450 will be the area, where the pair will settle in the near term.