Today's Currency Movers

ECB Prepares Ground For December Easing. The ECB did what markets wanted and laid the groundwork for further easing measures in December. The question seems to be not if, but which measures the central bank can take to bring inflation back towards 2%, with the possibility of a deposit rate back on the table. Yields came down and the curve flattened from the short end, on the indication that the cut off point for negative yields under the QE program will be lowered further. The reliance of markets on ECB measures is increasing and what were initially exceptional measures becomes quickly the new normal.

EUR pairs are trending lower. Over the last five days euro has lost some ground across the board but the single currency has also been losing ground over the last month especially against the commodity currencies (AUD, CAD, NZD). In this report we will take a look at euro performance against them to reveal the concerted sell off in the currency. We will also identify the major support and resistance levels in these markets.



EURAUD, Daily

After the parabolic move in August EURAUD has been in a distribution phase and moved sideways. This is typical after an uptrend. Lately the pair has created lower highs and yesterday’s surprise from Mario Draghi caused the price to break below the rising trendline that has been in place since April this year. At the time of writing price is trading between a weekly pivotal high from December last year (1.5332) and August this year (1.5301) while July weekly high is just below at 1.5277. The 100 day SMA coincides with this and is currently at 1.5256. EURAUD is near major support level but the recent pivotal low from October 12th at 1.5400 and the sideways move that followed together with the further easing promises from the ECB could keep the market in a sell the rallies mode. Keep monitoring price action at resistance levels for momentum reversal signals. Price action at resistance levels will tell us how if the sentiment will stay euro negative. The 1.4991 – 1.5154 support bracket looks like a potential reversal point and could therefore work as a short target.





EURCAD, Daily

Just like EUR has been losing value against the AUD the other commodity currency CAD has been favoured by the markets over the last few weeks. This happened as EURCAD started to move sideways after a strong uptrend and an exhaustion move took place at the end of August. This week the pair tried to get back inside the rising regression channel but failed. The failure was helped by the Draghi speech and price has since fallen below the October 7th pivotal low. The June 4th and July 10th highs at 1.1460 and 1.4253 coincide roughly with a 100% Fibonacci extension level at 1.4195. The pair is trading just below a 1.4604 resistance which could turn it towards 1.4442 target. Eventually the 100% Fibonacci level at 1.4191 should come into play should the price advances be rejected at the resistance levels. I’ve left the Fibonacci extension levels off the chart to improve readability.





EURNZD, Daily

The third commodity currency NZD has strengthened 7.36% on average against all the currencies since the latter half of the September while EURNZD has lost 8.45% during the same period. EURNZD has been trending lower since it broke below 1.7500 support in September and has now moved below 100 day SMA. The pair is approaching 1.6054 level that supported price in June and is moving below the descending regression channel. In the weekly picture this same level coincides roughly with the weekly lower Bollinger Bands while a cluster of long term moving averages are within the 1.5 and 2 SD bands. All three (50 period, 100 period and 200 period) weekly averages are clustered between 1.5809 and 1.5974. The weekly Stochastics (7) are well into the oversold zone. Due to several technical factors in the proximity (weekly timeframe) the majority of the down move could be now behind us. The price is however still trending lower which suggests that there could be opportunities in the short side if we wait patiently for rallies to find their exhaustion points. Look for rally failures at resistance levels with a target at 1.6050 region.