EURUSD Breaking The Channel

Intermediate
  • EURUSD Spot has broken below the  50-day moving average
  • Market may see short-term Euro buying, this will not last
  • Neither the U.S. nor Eurozone economy are in rude health
  • No ECB support for the Euro as the region slipped into deflation during August

EURUSD Spot ventured below the 50-day moving average (50dma) on September 22 as shown by the activity within the golden circle in Figure 1.

EURUSD Chart

Figure1: EURUSD 12-Month Chart  and Past Weeks Spot, 50dma and 200dma                                                                                                                   Source: www.investing.com  , Spotlight Ideas

For that reason, it is not unreasonable to regard the price activity of the past week a representing a trend reversal. It is more than merely observing that the Dollar was just enjoying its best week since early April.

Neither the U.S. nor the Eurozone can claim to have a robust economy. Indeed, the data that was released was weaker than had been expected.

Germany published the September Business Climate survey which improved to 93.4, below the expected 93.8.

The U.S. released Initial Jobless Claims for the week ended September 18, which came in at 870,000 worse than the 843,000 expected and the previous 866,000. Continuing Jobless Claims for the week ended September 11 increased to 12.58 Million.

Looking Ahead

The EURUSD pair has posted a lower low and a lower high daily basis. This would imply that the bears are currently hold the whip hand.  

That said, the technical indicators across the MACD and Stochastic measures suggest that early Monday trade will see Euro buying. So, I would be a willing buying of early Euro momentum whilst treating it like a hot potato that I will drop once it seems over cooked.

Thus, I am just a short-term buyer as Spot does not seem primed to break above the 50dma and so after the first flurry of buying I see the Euro easing back.

Of course, the looming U.S. Presidential election will cast a shadow on the Dollar, but I cannot see ECB President, Christine Lagarde talking the Euro up on Monday or Wednesday. That region really needs a weaker currency to lift the economy and its inflation rate that was -0.2% YoY in August.

The focus will, of course, be at the end of the week when U.S. September Non-Farm Payrolls should be between 830,000 to 860,000 and the unemployment rate will decline to 8.2%.

Watch for:     Support levels: 1.1620 1.1580 1.1530      Resistance levels: 1.1685 1.1725 1.1760 

Macroeconomic Strategist

Stephen Pope is the Managing Partner of Spotlight Group. He has worked in the world of finance since 1982 and has performed d... Continued

Please comment below

Your email address will not be published. Required fields are marked *


Latest Related News

Dollar switches trend to up

US Dollar Index aims higher (DXY forecast)Euro breaks down - EURUSD forecastMajor negatives appear on Pound (GBPUSD forecast) and Aussie (AUDUSD forecast) Continued

Global Markets Outlook 2021

Initial Parameters: Chart analysis is technical and taken from medium-term historical patternTechnical projections based on a twelve-month time horizonTargets set are based on the most recent, significant technical adjustmentAnalysis is based on Elliot Wave and Fibonacci techniquesTechnical analysis only guides; exogenous factors can shock any marketMarkets, being capricious, forecasts are subject to revisionFundamental analysis can be commissioned on requestEquity sector analysis is thematic United States… Continued

Markets end 2020 in “risk on” mode

Macroeconomic/ geopolitical developments Trump finally signed the $900 billion COVID relief bill, a relief for markets.The EU-UK trade deal finally got done over the holiday season and was implemented at the end of 2020.Europe and the USA are still seeing aggressive increases in the numbers of cases, hospitalisations and deaths from COVID-19, as the new variant first identified in the UK is now being seen… Continued

Fresh lows on the US Dollar Index (DXY forecast)

Bull breakout on Euro (EURUSD forecast) Pound surges, breaks out (GBPUSD forecast) Aussie bull signal (AUDUSD forecast) US Dollar-CAD downtrend ends (USDCAD forecast)  Continued

Dollar Breaks down, Euro Breaks up – DXY and EURUSD forecasts

Dollar Index now showing a trend extreme. (DXY forecast)Pound reaches major upside target (GBPUSD forecast)Dollar Yen posts positive (USDYEN forecast)Dollar CAD breaks down (USDCAD forecast) Continued

Forex Brokers in your location


SIGN UP

72% of retail investor accounts lose money when trading CFDs with this provider.


SIGN UP

74-89% of retail investor accounts lose money when trading CFDs with this provider.


SIGN UP

75% of retail investor accounts lose money when trading CFDs with this provider.


SIGN UP

76.4% of retail investor accounts lose money when trading CFDs with this provider.