EUR/USD didn’t even wait for the ECB rate decision and the USD non-farm payrolls and it broke below the support at 1.2350. Considering that I think it’s very likely the bearish trend will continue with target at least 1.2200.
Thank you, Victoria…
Interestingly, I was looking again at my own analysis of this, and now that we are getting (finally) closer
to that 1.20 area, it has the same number and the same implications as that EUR/CHF ‘floor’ that has been
the topic of so much discussion going into the Swiss referendum on gold holdings: would the ‘floor’ hold?
One difference: the EUR/USD has no central bank backing, unlike the EUR/CHF with the SNB…
Could EUR/USD continue lower than 1.20? Or, would this be where some catalyst makes this a huge
demand area?
I take it from various commentators, that to push the EUR/USD below 1.20 and back, say, to parity
(1.00, that is), it would take something much more …momentous, something really BIG: do we see
such an event on the horizon?
From the chart screenshot below, which I have prepared just for this post/forum, you can see how on the
monthly time-frame, the four grey-shaded (black-circled) peaks are squeezing price action in a multi-year
wedge formation: this spells a long, drawn-out breakout material, that is coiling up against that descending
top on one side, and that (thick, purple-lined) floor at 1.23 (or we could call it 1.22, or even an area
between 1.20 and 1.23…drawing lines on a monthly chart is always a +/-100 pip approximation)…
What I also noticed, is that this ‘floor’ at 1.23 (or 1.22, etc., you get my point) has been tested almost
every two years, since 2008, thus forming a demand zone for this pair in 2008, 2010, 2012, and 2014;
however, top-side movement space is running out, due to that forming wedge top, so there may not
be another ‘bounce’ and this late-2014 test may be the last one… This is yet another clue that spells
either a dramatic movement back up, retracing the space in the direction of the 2008 high (1.60) or
straight through that 1.23 (or 1.22, etc.) level, deeper and deeper down…
The PMI of service sector on the EuroZone was revised downwards in November.
The compound PMI fell to its lowest level since June 2013, confirming that the euro area economy lost the momentum which seemed to come gaining.
Weak PMI can mean stagnation and press the ECB to act.
If the ECB on Thursday meeting sends a strong message, it can serve as a catalyst for any increases on EURUSD.
R3 - 1.25450
R2 - 1.25103
R1 - 1.24458
Daily Std. Pivot - 1.24111
S1 - 1.23466
S2 - 1.23119
S3 - 1.22474
Today we saw the 1.2300 for the EURUSD, so it became obvious that 1.2200 will be the target.
strong fundamentals on the EUR/USD the next two days. but I am more interested what the ECB will decide to face the near recession in the euro zone
[B]Given that this is the hot topic of the moment (not just on this thread),
I saw John Kicklighter(DailyFX’s Chief Strategist)'s video this very morning,
which deals exactly with this issue, and I thought I should post it here for you:
[/B]
Bearish downtrend continues as expected and 1.2350 was broken, reinforcing bearish momentum for the trend. Bears remain in control of the pair below the 10-day moving average, currently at 1.2425. The fundamental explanation for the bearishness on the Euro sums up nicely on the following title: “Eurozone suffers from low potential growth and weak competitiveness, while political support for reform remains limited.”
Lack of growth and competitiveness, however, could be said to also summarise the situation of many countries…
What really matters, in a way, is what interest rates do, and the market’s expectation of which major banks will
hike rates… The falling Euro against the USD, seen from that simple angle, reveals a story that the USD rate-hike
sentiment has been already front-run by investors, hence the Euro sell-off…
In terms of the UK, it too suffers from low wage growth and high job insecurity for millions of people, however what
propped up the Pound was the entirely speculative discourse about 2014 Bank Of England rate hikes, which never
actually happened: the Pound sell-off (against the USD) began once the market realised that it had over-run its
own guessing game, and that the rate hike was now going to happen no sooner (on an optimistic forecast) than
spring of 2015.
Look at what happened to New Zealand: a ‘prosperous’ nation, by all accounts, but what drove the NZD up at the
start of 2014 was the announcement of the massive rate hike targets from the RBNZ… Look at the NZD/USD now,
and how it has been punished, and brutally so, for failing to deliver those rate hikes in full…
So the difficulty in calculating the effect of real economy on currency trading scenarios is that the real economy and
capital flows (i.e. speculation) are sometimes very much different things… Look at what propped up the Euro in
recent times: not a healthy Spanish or Italian employment/labour statistics backdrop, but, rather, capital flow into
Spanish and Italian ‘junk’ bonds… Purely speculative flow, resulting in an unnaturally high Euro… In the end, the
final blow came when the markets realised the ECB really was going to initiate its own form of QE…
But there is, in truth, stagnant wage growth in the USA as much as the Eurozone… and so for the people on the
ground, this ‘low potential growth and weak competitiveness’ of the Eurozone is as true in the US as in the Europe.
Wouldn’t you agree?
Hello, peeps!
I thought that this summary of quotes from Draghi and live commentary on the Euro reactions from DailyFX
summed up the situation pretty neatly:
The ECB rate decision certainly had an effect but it was not the effect I was hoping for. Still, despite the movement to the upside I don’t believe that the bearish trend is over yet. I still think that the EUR/USD pair will reach target 1.22 sooner or later.
EUR / USD continued to fall on Wednesday, breaking below the main support line.
These signs designate the momentum “bearish”, and open the way for us to see probably the lowest pair in the near future.
R3 - 1.24552
R2 - 1.24225
R1 - 1.23659
Daily Std. Pivot - 1.23332
S1 - 1.22766
S2 - 1.22439
S3 - 1.21873
I think that it is the right thing to do is to sell for the long term to assure the profit.
there are no indicators say that the bearish trend has ended. the ECB conference was rather weak It will not help on the long run. tomorrow’s american Non-farm payroll will easily crush the Euro.
Eur/usd might head higher if NFP tomorrow is weak, but overall it would still be bearish trend.
I agree, today we traded as low as 1.228, let’s see what NFP tomorrow would offer us.
As of today 2nd December, the EUR/USD has been taking a little bearish trend since the last few days; I placed a buy trade at the prize 1.2425 on Profiforex account with my stop loss placed at 1.2450 since am not planning to close the trade today to avoid any surprised…. Am still monitoring the market and bring and update tomorrow.
EURUSD tried to rally during most of the day yesterday, but struggled to stay above the 10-day moving average and the pair gave up about half of the gains considering that the non-farm payroll numbers are release today. Most traders will be willing to get out of the market at the end of the day, as the volatility should pick up this morning. So rallies all the way up to the 1.2577 level will offer selling opportunities.
The non-farm payroll today ruined Draghi’s efforts from yesterday and the euro is once again in freefall. The EUR/USD bearish trend continues and the pair will likely reach 1.2200 sometime soon.
Yes, some big transactions have taken the opportunity of a positive NonFarm Payroll print to
move US Dollars about… and, as a result, EUR/USD, GBP/USD, NZD/USD have all taken a little
tumble…
However, what will happen in the next two weeks is the liquidity drain, as we get closer to the
Christmas holiday and the end-of-year profit-taking, which means that if the last big events
for Euro and USD have been spent this week, the next three December weeks could see a stall…
In other words, even if we stayed under 1.23, price may not go much beyond that…
The opposite scenario could also be true, where the natural continuation of the trend could just
run on, although there is such a thing as a trend exhaustion, as we have come down from 1.39-1.40
to 1.23-1.22, which is around 1,800 pips, and it is certainly not a mammoth run but getting to be
a more mature trend, and, therefore, less people may be willing to jump in at this point (and the same
could be said for the GBP/USD downtrend)…
I have limited myself to just trading the NZD/USD downtrend, and it has been three weeks of gradual
and steady bearishness, so I have done well by this longer term trade, and am about half-way into my
target run… However, I am still keeping an eye on EUR/USD and EUR/GBP, because I am just interested
in these pairs generally, and to see what they may offer for next year.
I cannot believe that this year is nearly over, Victoria!!!
Happy Trading.