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BASIC PARAMETERS
• Stop: 1.0702
• Limit: 1.0550
• Time horizon: 1 day
On yesterday session, the EURUSD fell with a narrow range and closed near the low of the day, although managed to close within previous day range, which suggests being slightly on the bearish side of neutral.
The currency pair is trading above the 10 and 50-day moving averages should act as a dynamic supports but remains trading below the 200-day moving average that also should act as dynamic resistance.
The key levels to watch are: a daily resistance at 1.0819, a daily support at 1.0622, the 10-day moving average at 1.0607 (support), the 50-day moving average at 1.0558 (support) and a daily support at 1.0462.
Germany December PPI mm +0.4% as expected
Germany December PPI report 20 Jan
On yesterday session, the EURUSD initially fell but found enough support near the 10-day moving average to trim all its losses and managed to close near the high of the day, although closed within previous day range, which suggests being slightly on the bullish side of neutral.
The currency pair is trading above the 10 and 50-day moving averages should act as a dynamic supports but remains trading below the 200-day moving average that also should act as dynamic resistance.
The key levels to watch are: a daily resistance at 1.0819, a daily support at 1.0622, the 10-day moving average at 1.0620 (support), the 50-day moving average at 1.0560 (support) and a daily support at 1.0462.
With the start of the 45th President of USA era the EUR/USD pair is seen uplifted and reached a six week high, climbing above the 1.07 handle. Looking at a weekly chart the technical indicators are recovering from oversold territory but yet are placed below the mid-lines. Expecting an upward correction around 1.08 level.
EUR/USD Weekly Forecast January 16-20
EUR/USD recovered during the past week, marking the fourth consecutive weekly gain. Volatility in the pair has slowed following Donald Trump’s press conference and continued to slow further in the past week with the Presidential inauguration causing relatively small fluctuations. Economic data also struggled to move the exchange rate and with a relatively light calendar for the week ahead, a further slowdown appears likely.
The latest CPI data out of the United States pointed to a continued rise in inflation. The consumer price index rose 2.1% annually while the core figure was reported to rise 2.2%. The data supported the case for three rate hikes this year but failed to have a sustained impact on the Dollar. Fed chair Yellen provided a speech on Wednesday and on Thursday, taking a more hawkish approach to monetary policy. The Fed chair was optimistic about the US economy, reaffirmed the need to raise rates and discussed risk associated with letting the economy run hot by waiting too long to normalize.
The ECB left monetary policy unchanged at their meeting after extending their bond purchasing program at the prior meeting. Draghi maintained a dovish tone, reiterating that the central bank could ease further if required to do so. While inflation has risen and the economy has expanded, he dismissed talks of tapering, maintaining his stance that the Governing Council had not discussed it.
The odds of a rate hike as priced by the futures market increased in the past week following Yellen’s speech but declined in the second half of the week. The odds of an increase in the Federal Funds rate dropped to 21.9% for March while the expectation for a June hike was priced at 70.6%.
Market positioning as indicated by the COT report remained relatively unchanged for a second consecutive week. The data reflected positioning shifts for the week of the President Trump press conference as the data covered the week to January 17th. Euro positioning among non-commercials increased by $221 million to bring the net short position to $8.9 Billion. There was a small decline of $536 million in the aggregate US Dollar position to bring the net long to $27.0 billion. The positioning report continues to highlight the risk to the Euro in the event of a turn in the Greenback as the currency is held net short at about half of the size seen ahead of the US elections.
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The EUR/USD pair closed higher last week and the sentiment for the new week seems to be in favour of the bulls. Strong support is placed at 1.0550. Looking to upside now resistance is seen at 1.0750 and higher at 1.0815.
On the last Friday’s session the EURUSD initially fell but found enough support at 1.0622 to bounce back up and closed near the high of the day, in addition the currency pair managed to close above Thursday’s high, which suggests a strong bullish momentum.
The currency pair is trading above the 10 and 50-day moving averages should act as a dynamic supports but remains trading below the 200-day moving average that also should act as dynamic resistance.
The key levels to watch are: a daily resistance at 1.0819, a daily support at 1.0622, the 10-day moving average at 1.0631 (support), the 50-day moving average at 1.0561 (support) and a daily support at 1.0462.