Again, the FX market is back to its previous status of low volatility, even as world leaders are still arguing over who should be responsible for the MH17 crash and the death roll of Gaza conflicts are raising fast.
Euro/Dollar closed as a doji for the third straight session yesterday, with the price falling to the essential support level at the prior low of 1.3476 from back on the 1st February. When we are looking at the weekly chart of this pair, the Pennant pattern starting from February 2012 seems to be close to a breakout. If this becomes true, then we may witness a significant fall in the Euro in the mid-term.
EURUSD Weekly
In the Asian markets yesterday, the Australian stocks closed at a six-year high. The ASX 200 rose by 0.15% to 5540. The Shanghai Composite closed 0.22% higher to 2054. The Nikkei Stock Average closed for holiday. In European stock markets, the FTSE closed 0.31% lower, the DAX lost 1.11%, and the CAC was down 0.71%. U.S. stocks were traded cautiously yesterday after the big rally last Friday. The Dows lost 0.28% to 17052. The S&P 500 edged 0.23% higher to 1974, while the Nasdaq Composite Index fell by 0.17% to 4425.
It looks like a potential double top to me if the S&P500 falls below the previous lows of June – near 1944. The breakout of this level will confirm the termination of the bullish trend and will lead to a middle term reverse.
On the data front, local investors should pay attention to RBA Governor Stevens’ speech at 13:00 AEST. Eurozone CPI will be at 19:00 AEST and the U.S. CPI will be out at 22:30. Finally, Existing Home Sales will be released at midnight.
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