Trading Analysis Corner

The single currency had a poor Easter weekend. A mixture of low volumes and a mini-resurgence in the dollar caused the single currency to head south, reaching a low of 1.3785. An attempt to recover failed at 1.3810, after a mixture of weak construction data for February, which rose a mere 0.1% after a 1.6% gain in January, and comments from ECB member Coeure.

ECB members have been wreaking havoc with the EUR recently, Coeure joined in the chorus today and said:

  • As the EUR strengthens, accommodative policy is more justified.

  • EUR appreciation contributed to low inflation.

  • ECB has room to cut rates further.

The dovish rhetoric continues to spill from the ECB, yet EURUSD is still less than 1% from its April peak. EURUSD is in consolidation mode, and the bears may not attack the EUR until the ECB puts its money where its mouth is.

Wednesday’s flash PMI readings for the currency bloc for April could be key for the EUR in the short term. If these surveys are moderately higher, as the market expects, then we could see the EUR cling on to 1.3800 for a while longer, but any weakness in the surveys and we could see EUR fall sharply.

While the market fails to react to ECB rhetoric, it’s time to look towards the technicals. A couple of bearish developments stand out:

  • The bearish crossover on the daily MACD suggests that momentum is to the downside.

  • A daily close below the daily cloud at 1.3804 would suggest an end to the recent up-trend.

Some key levels on the downside to watch include:

  • 1.3790 – the 50-day sma.

  • 1.3762 – the 61.8% Fib retracement of the April recovery.

  • 1.3664 – this is a critical level of support and the 61.8% Fib retracement of the February to March advance. If we fall below here then it opens the way to further downside.

Takeaway:

  • The fundamental backdrop is weak for the EUR, however EURUSD remains in consolidation mode.

  • Wednesday’s flash PMI surveys for April could be important for the short term direction of this pair.

  • The technical picture is looking weak for EURUSD, a daily close below the top of the daily cloud at 1.3804 may trigger further downside.

Trading Analysis Corner

CFD’s, Options and Forex are leveraged products which can result in losses that exceed your initial deposit. These products may not be suitable for all investors and you should seek independent advice if necessary.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD remained bid above 0.6500

AUD/USD remained bid above 0.6500

AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.

AUD/USD News

EUR/USD faces a minor resistance near at 1.0750

EUR/USD faces a minor resistance near at 1.0750

EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.

EUR/USD News

Gold holds around $2,330 after dismal US data

Gold holds around $2,330 after dismal US data

Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.

Gold News

Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options

Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options

Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.

Read more

US economy: slower growth with stronger inflation

US economy: slower growth with stronger inflation

The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.

Read more

Majors

Cryptocurrencies

Signatures