The Euro has continued to feel the selling pressure this week as the market’s focus shifts towards a resurgent U.S. Dollar. The Euro has subsequently drifted lower whilst its price action has formed a distinct wedge pattern on the daily chart. Considering the lows are getting lower, it might be time for the Euro to experience a squeeze to the short side.
In a week that includes a slew of U.S economic figures, including the closely watched Non-Farm Payroll data, the market is looking for any sign of strength that the Fed may use to stump up their case for a rate rise.The pair is subsequently under considerable scrutiny as traders look for a reason to short the currency.
For now, the Euro’s price action is squeezed between a wedge pattern that will be decisive in the coming days. Today’s morning Sydney session saw price action decline strongly to challenge the bottom of that wedge formation. The moving averages also tell a story of bears firmly in control as the price action, as well as the 30EMA, remains firmly below the 60EMA.
Taking a look at our RSI oscillator also shows an indicator starting to slip lower from within neutral territory. It is also encouraging that the pair has just managed to fall through the 23.6% retracement level on the daily charts. The evidence is subsequently pointing towards any breakout possessing a short side bias.
Moving forward it is likely that pressure will continue to build for a downside push in the coming sessions. If we do indeed see a definite breakout of the current wedge we could see prices sharply correcting towards support at 1.0888. However, wedge squeezes are often difficult to predict and traders should keep a close watchon false breakouts.
Ultimately, the factors are likely to favour a bearish bias but it is important to closely monitor the U.S. economic data due out this week. The U.S. Trade Balance and Non-Farm Payroll figures are likely to show some strength and subsequently should be watched closely as it is highly probably that the results will impact the currency.
Risk Warning: Any form of trading or investment carries a high level of risk to your capital and you should only trade with money you can afford to lose. The information and strategies contained herein may not be suitable for all investors, so please ensure that you fully understand the risks involved and you are advised to seek independent advice from a registered financial advisor. The advice on this website is general in nature and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances. The information in this article is not intended for residents of New Zealand and use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Knight Review is not a registered financial advisor and in no way intends to provide specific advice to you in any form whatsoever and provide no financial products or services for sale. As always, please take the time to consult with a registered financial advisor in your jurisdiction for a consideration of your specific circumstances.
Recommended Content
Editors’ Picks
AUD/USD pressures as Fed officials hold firm on rate policy
The Australian Dollar is on the defensive against the US Dollar, as Friday’s Asian session commences. On Thursday, the antipodean clocked losses of 0.21% against its counterpart, driven by Fed officials emphasizing they’re in no rush to ease policy. The AUD/USD trades around 0.6419.
EUR/USD extends its downside below 1.0650 on hawkish Fed remarks
The EUR/USD extends its downside around 1.0640 after retreating from weekly peaks of 1.0690 on Friday during the early Asian session. The hawkish comments from Federal Reserve officials provide some support to the US Dollar.
Gold price edges higher on risk-off mood hawkish Fed signals
Gold prices advanced late in the North American session on Thursday, underpinned by heightened geopolitical risks involving Iran and Israel. Federal Reserve officials delivered hawkish messages, triggering a jump in US Treasury yields, which boosted the Greenback.
Bitcoin Price Outlook: All eyes on BTC as CNN calls halving the ‘World Cup for Bitcoin’
Bitcoin price remains the focus of traders and investors ahead of the halving, which is an important event expected to kick off the next bull market. Amid conflicting forecasts from analysts, an international media site has lauded the halving and what it means for the industry.
Is the Biden administration trying to destroy the Dollar?
Confidence in Western financial markets has already been shaken enough by the 20% devaluation of the dollar over the last few years. But now the European Commission wants to hand Ukraine $300 billion seized from Russia.