The Euro is trading little changed on the upside at around 1.1370 as the Bank of Japan downgraded its inflation forecast citing overseas risks building up, while trade talks development weighs on sentiment. The ECB is also expected to voice downturn concerns on Thursday.
EUR/USD latest news
EUR/USD latest analysis
1. Technical Overview
The four-hour chart shows that the pair continues trading in the downtrend channel that formed last week. The recent stagnation pushed euro/dollar closer to the upper end of the channel and it may now fall towards the lower end.
Another bearish sign comes from the Simple Moving Averages. The 50 SMA is crossing the 200 SMA to the downside, indicating further falls.
Momentum remains to the downside, and the Relative Strength Index (RSI) is still above 30. This implies that the pair does not suffer from oversold conditions.
Some support awaits at 1.1355 which was a low point late last week. The next level to watch is 1.1335 that cushioned the pair on Tuesday. More significant support is at the 2019 low of 1.1310. Next, we find the double-bottom at 1.1270 and 1.1215, the 2018 low.
Looking up, 1.1380 held the pair down earlier in the week. 1.1410 was a stubborn cap last week, and 1.1450 served as support around that earlier in January. 1.1480 was the peak just before the sell-off.
EUR/USD PRICE SENTIMENT
EUR/USD BULLISH PERCENTAGE INDEX
EUR/USD Pivot points
EUR/USD trading positions
2. Fundamental Overview
The world's most popular currency pair is stuck in the same familiar range once again, around 1.1360 at the time of writing and the day's range is just below 20 pips. These low volatility situations do not last for too long. Where will the pair go to when it begins moving?
There are three reasons why bears may have the upper hand.
1) Global growth worries
Early in the week, China reported the slowest growth levels since 1990. Trade talks between China and the US are not going anywhere fast. The Bank of Japan warned about global growth, and so did the International Monetary Fund. And the US government shutdown is also beginning to weigh on sentiment.
In the old continent, the European Union's Pierre Moscovici added his concerns as well. The German ZEW figures showed a deterioration in current conditions.
Stocks are on the back foot amid this growing gloom, and the US Dollar finds demand as a safe-haven currency.
2) Draghi is ready to drag
Mario Draghi, the Italian President of the European Central Bank, has been putting a brave face in recent public appearances, acknowledging the slowdown but also remaining optimistic.
But for how long? He is usually quite dovish and cannot ignore worrying signs, whether they come from his own country's clash with Brussels or China.
Tensions are mounting towards the first ECB decision of 2019 coming on Thursday, and his tone may weigh on Euro.
EURUSD FUNDAMENTALS TODAY
China's economic growth last year dropped to its lowest rate in a generation and though there were a number of international and domestic reasons for that performance the Chinese economy has been slowing steadily for the last five years.
3. Big Picture
Themes affecting the EUR/USD
Influential Institutions & People for the EUR/USD
The Euro US Dollar can be seriously affected by news or the decisions taken by two main central banks:
The European Central Bank (ECB) is the central bank empowered to manage monetary policy for the Eurozone and maintain price stability, so that the euro’s purchasing power is not eroded by inflation. The ECB aims to ensure that the year-on-year increase in consumer prices is less than, but close to 2% over the medium term. Another of its tasks is the one of controlling the money supply. The European Central Bank’s work is organized via the following decision-making bodies: the Executive Board, the Governing Council and the General Council. Mario Draghi, member of the Executive Board, is also the President of this organism.
On the other
Mario Draghi is member of ECB's Executive Board and also the President of this organism. His declarations are an important source of volatility, especially for the Euro and the currencies traded against it. Born in 1947 in Rome, Italy, he graduated of the Massachusetts Institute of Technology and became President of the European Central Bank in 2011. Draghi gives press conferences in the back of how the ECB observes the current European economy. His comments may determine positive or negative trends for the Euro in the short-term. Usually, a hawkish outlook is seen as positive/bullish for the EUR, while a dovish one is seen as negative/bearish.
Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.
ECB NEWS & ANALYSIS
FED NEWS & ANALYSIS
The EUR/USD (or Euro Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The popularity is due to the fact that it gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since the EUR/USD pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear, let alone a consequent breakaway gap in the opposite direction.
Normally, it is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online. If there is important U.S. data we can expect quiet markets just ahead of the number. U.S. economic news have the ability to either reinforce an existing trend or reverse it depending on by how much it missed or beat expectations with the EUR/USD news. By 5:00 GMT liquidity leaves the market once again as European traders close out positions and head home.
EURUSD YEARLY FORECAST
The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs worldwide. This group also includes the following currency pairs: EUR/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The pair is also called 'The Cable', reffering to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term was originated in the mid-19th century and it makes GBP/USD one of the oldest currency pairs in the world.
The popularity of the Pound Dollar is due to the fact that represents two strong economies: British and American (from United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, where the majority of the British voted to abandon the European Union, GBP/USD has been suffering some turbulence in the Forex market as a consequence of the associated risks of leaving the single market.
The USD/JPY (or US Dollar Japanese Yen) currency pair is one of the 'Majors', the most important pairs in the world. Japanese Yen has a low interest rate, normally used in carry trades, that's why is one of the most trades currencies worldwide. In the USD/JPY the US Dollar is the base currency and the Japanese Yen is the counter currency. The pair represents American (from United States of America) and Japanese economies.
Trading the USD/JPY currency pair is also known as trading the "ninja" or the "gopher", although this last name is more frequently used when reffered to the GBP/JPY currency pair. The US Dollar Japanese Yen usually has a positive correlation with the following two pairs: USD/CHF and USD/CAD. The nature of this correlation is dued to the fact that both currency pairs also use the US Dollar as the base currency, such as USD/JPY. The value of the pair tends to be affected when the two main central banks of each country, the Bank of Japan (BoJ) and the Federal Reserve Bank (Fed), face serious interest rate differential.