Valeria Bednarik, Chief Analyst at FXStreet, notes that EUR/USD technical indicators head sharply lower following the Brexit outcome last Friday, supporting a continued decline for the upcoming days.
Key Quotes
The UK has voted to leave the EU, and markets had one of many to come, Black Friday. The final result of the UK's referendum on EU membership showed that 52% voted in favor of ‘Leave‘ and 48% in favor of ‘Remain’. Markets were taken off guard, and currency pairs moved by hundreds of pips all through the day.
It will take some time to sort out the mess, but life goes on. The immediate consequence of this Brexit has been high yielders plummeting and safe havens soaring, but will have many other implications that will develop during the upcoming days, and weeks and even months, the most notable one, is that Central Banks will probably turn ultra dovish, and a FED rate hike is out of the table for the rest of this 2016.
The EUR/USD pair settled at 1.1086 by the end of the week, having been down to 1.0910 in the peak of panic selling, and has broken below the daily ascendant trend line coming from November 2015 low, with intraday recoveries towards it, resulting in sharp retracements.
Technically, the daily chart shows that the pair closed the week a handful of pips above the 200 DMA, whist the technical indicators head sharply lower within negative territory, supporting a continued decline for the upcoming days moreover on a downward acceleration below the mentioned DMA at 1.1080. In the 4 hours chart, the technical indicators have managed to correct extreme oversold readings before resuming their declines, also pointing for a downward extension ahead.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
EUR/USD extends sideways grind below 1.0900
EUR/USD stays in a consolidation phase below 1.0900 following the previous week's rally. In the absence of high-tier data releases, the US Dollar stays resilient against its rivals as investors scrutinize comments from central bank officials.
Gold retreated from record highs, maintains the upward bias
Gold rose sharply at the beginning of the week on escalating geopolitical tensions and touched a new all-time high of $2,450. With market mood improving modestly, XAU/USD erases a majority of its daily gains but manages to hold above $2,400.
GBP/USD holds steady near 1.2700, in an uneventful US session
GBP/USD fluctuates in a narrow channel near 1.2700 on the first trading day of the week. The cautious market stance helps the US Dollar hold its ground while central bank officials fail to trigger some action ahead of this week's key events.
Ripple stays above $0.50 on Monday as firm backs research on blockchain and quantum computing
XRP price holds steady above the $0.50 key support level and edges higher on Monday, trading at 0.5130 and rising 0.70% in the day at the time of writing.
Week ahead: Nvidia results and UK CPI falling back to target
What a week for investors. The Dow Jones reached a record high and closed last week above 40,000, for the first time ever. This is a major bullish signal even though gains for global stocks were fairly modest on Friday, and European stocks closed lower.