With the ECB cutting rates and surprising the markets with the more dovish QE announcement, one would expect EUR pairs to be near their lows. However roughly a half hour after the EUR selloff, many of the EUR pairs reversed and went bid. The EUR/USD was one of those pairs that reversed, which caused DXY to also reverse back to levels prior to the announcement. Therefore, many EUR and USD pairs put in reversal candles on daily timeframes:
EUR/USD
EUR/NZD
However, none seemed to have had quite as large of a possible reversal signal as the EUR/MXN, which put in a hammer near the bottom of the 2019 trading range on a daily timeframe.
The pair has been trading in a falling wedge for the last week, as seen on a 240 min timeframe. Today, the pair put in a false breakdown into a support zone. It then proceeded to bounce out of the support area and test the upper end of the falling wedge.
If the hammer on the daily is any indication of a potential reversal, EUR/MXN may be ready to break out of the wedge. The target for the breakout of a wedge is a 100% retracement of the entire wedge, which is 21.82. First resistance comes in at 21.59 (horizontal resistance). First support is today’s lows at 21.45. Below that, support is the horizontal channel line at 21.07.
Data for Europe and Mexico is light tomorrow. Pending any unexpected headlines or tweets, EUR/MXN many continue to trade off technicals into the weekend.
Risk Warning Notice Foreign Exchange and CFD trading are high risk and not suitable for everyone. You should carefully consider your investment objectives, level of experience and risk appetite before making a decision to trade with us. Most importantly, do not invest money you cannot afford to lose. There is considerable exposure to risk in any off-exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of the markets that you are trading. Margin and leverage To open a leveraged CFD or forex trade you will need to deposit money with us as margin. Margin is typically a relatively small proportion of the overall contract value. For example a contract trading on leverage of 100:1 will require margin of just 1% of the contract value. This means that a small price movement in the underlying will result in large movement in the value of your trade – this can work in your favour, or result in substantial losses. Your may lose your initial deposit and be required to deposit additional margin in order to maintain your position. If you fail to meet any margin requirement your position will be liquidated and you will be responsible for any resulting losses.
Recommended Content
Editors’ Picks
EUR/USD extends gains above 1.0700, focus on key US data
EUR/USD meets fresh demand and rises toward 1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold closes below key $2,318 support, US GDP holds the key
Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter GDP due later on Thursday.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
Meta takes a guidance slide amidst the battle between yields and earnings
Meta's disappointing outlook cast doubt on whether the market's enthusiasm for artificial intelligence. Investors now brace for significant macroeconomic challenges ahead, particularly with the release of first-quarter GDP data.