The top of the range on EURJPY still held as a ceiling as risk aversion returned to the markets. Price is now making its way towards support at the 112.75 area and might even be poised for a break lower.
The moving averages are still oscillating, which suggests that the consolidation could carry on. Price is heading below these dynamic inflection points, an early indication that selling pressure is taking hold.
Stochastic turning down from the overbought zone to show a pickup in bearish momentum. Thereâs still plenty of room for the oscillator to head south so sellers may be in control for some time. If price breaks below support, EURJPY could be in for a 300-pip drop, which is roughly the same height as the range.
The US election results are taking its toll on market sentiment, sending global futures down and spurring a flight to the safe-haven Japanese yen. So far, the growing lead by Republican nominee Donald Trump is sparking a lot of fear and uncertainty since his brash rhetoric could have repercussions on financial markets.
Data from the euro zone was also mostly weaker than expected, with German industrial production down 1.8% versus the projected 0.6% drop and both German and French trade balance printing worse than expected readings.
Data from Japan has been mixed, but it looks like the lower-yielding currency is taking its cue from risk sentiment above anything else. A Clinton victory could still yield a return in risk-taking, possibly allowing EURJPY to head back to the top of its range while a Trump win could lead to significant declines.
By Kate Curtis from Traderâs Way
NZDUSD has sold off recently but appears to be approaching a rising trend line thatâs just forming on its 1-hour time frame. A bounce off this support area could lead to a test of the previous highs at the .7400 major *psychological level or the creation of new ones.
The 100 SMA just crossed above the longer-term 200 SMA to show that buyers are taking control of price action. Stochastic is indicating oversold conditions to suggest that sellers are starting to get exhausted, possibly giving way to bulls later on.
In addition, the moving averages are close to the rising trend line and 61.8% Fib, which could be the line in the sand for any pullback. This also coincides with a former resistance area, which might now hold as support.
The RBNZ just cut interest rates by 0.25% to 1.75% as expected. RBNZ Governor Wheeler highlighted both improvements and weaknesses in the global and domestic economy, concluding that a lower exchange rate is needed for growth to be sustained enough to bring inflation to the middle of its target range.
Meanwhile, the US dollar is still recovering from the post-election selloff and has been lifted by the pickup in US equities. For now, it looks like investors are giving new US president Trump the benefit of the doubt and are pricing in potential upside for companies on his sweeping tax reform plan.
Apart from that, itâs worth noting that both White House and Congress are under Republican control, which suggests smoother passage of laws without much gridlock. Thereâs not much in the way of top-tier data from the US for the rest of the week so the focus could stay on the governmentâs economic agenda.
By Kate Curtis from Traderâs Way
GBPJPY has staged a strong rally recently but is currently hitting the ceiling at the top of its descending channel pattern visible on the 4-hour chart. If this area keeps gains in check, price could head back towards support at the 122.00 area or at the mid-channel area of interest at 127.00.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. However, the gap between the moving averages is narrowing so an upward crossover might be due, possibly leading bullish pressure to pick up.
Stochastic is indicating overbought conditions, which suggests that buyers are exhausted for now. Selling momentum could return if the oscillator turns down from the overbought zone soon.
Sterling has been one of the stronger performers recently, as the pickup in risk appetite has allowed pound pairs to bounce off their lows. This has also forced the safe-haven Japanese currency to return its recent gains, with traders deciding to stay optimistic about global economic prospects.
Economic data from Japan has been in line with expectations today, as the tertiary industry activity index showed a 0.1% drop for September after staying flat in the previous month. There are no other reports due from Japan today so risk sentiment and profit-taking might push yen pairs around.
There are no reports due from the UK today as well. Several banks are closed for holidays so liquidity is thin, which could present opportunities for more volatile price action.
By Kate Curtis from Traderâs Way
NZDUSD has been trading inside an ascending channel pattern on its daily time frame and is currently testing support at the .7100 major psychological level. A bounce off this channel bottom could lead to a move back to the top or until the recent highs at .7400.
On the other hand, a break lower could mark the start of a long-term downtrend for NZD/USD. Price is forming a head and shoulders pattern, which is a classic reversal signal, but it has yet to break below the neckline around .7000-.7050 to confirm the selloff.
Stochastic is heading south so sellers are in control of price action, but the oscillator is nearing the oversold area to show that bearish momentum could be exhausted soon. The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside unless a downward crossover takes place.
Over the weekend, a strong earthquake hit Christchurch once more, leading many to speculate that the RBNZ might need to add stimulus again in order to keep the economy afloat. The central bank just cut interest rates by 0.25% in last weekâs rate statement and reiterated that a lower exchange rate is needed.
Meanwhile, the US dollar has been gaining ground after the elections as traders are pricing in the potential impact of Trumpâs leadership on businesses. In his campaign, the president-elect promised lower corporate taxes, healthcare overhaul, and banking deregulation, which could be positive for equities in the long run.
Up ahead, US retail sales, PPI, and CPI figures are all lined up for the week, including a speech by Fed head Yellen later on. Market watchers are now turning their attention to the December FOMC decision and rate hike expectations could keep the dollar supported. New Zealand has its GDT auction, quarterly retail sales and PPI due.
By Kate Curtis from Traderâs Way
USDJPY has completed its correction to the broken long-term trend line extending all the way back to 1998 so the reversal could resume from here. This coincides with the 50% Fibonacci retracement level on the swing low and high on the monthly chart, which seems to have held as strong support.
The 100 SMA is below the longer-term 200 SMA on this time frame, though, so the path of least resistance might still be to the downside. For now, the 200 SMA is holding as dynamic support.
Stochastic is indicating oversold conditions and is slowly turning higher. This could draw bulls back in the game, giving USDJPY more upside momentum until the next ceiling around the 110.00 level. A move past that area could eventually take USDJPY up to the swing high at 125.00.
Renewed optimism in the US economy after the elections has allowed the Greenback to regain ground against its forex peers. It seems as though investors are looking past the uncertainty and focusing on how lower corporate taxes and higher infrastructure spending could shore up profitability for US companies and overall economic growth.
Apart from that, traders are also turning their attention back to the projected 0.25% rate hike from the FOMC this December. There are several US reports on deck, namely retail sales, CPI, and PPI, so the outcomes could still influence rate hike expectations. Fed Chairperson Yellen also has a testimony lined up for Thursday, and this is expected to be a big mover for dollar pairs.
There are no major reports lined up from the Japanese economy, leaving the yen to return its previous risk-off gains. Besides, data from Japan hasnât been too impressive so the BOJ isnât expected to reduce its stimulus efforts anytime soon.
By Kate Curtis from Traderâs Way
USDCAD recently broke past the 1.3500 major psychological resistance and climbed close to the 1.3600 mark before pulling back. Applying the Fib tool on the latest swing low and high shows that the 50% level lines up with the broken resistance and area of interest.
Stochastic is heading lower so a larger correction might be due until the 61.8% level. However, the oscillator is already in the oversold region so sellers are tired and might let buyers take over. If so, the Fib levels could keep losses in check and push the pair back up to the swing high.
The 100 SMA is above the longer-term 200 SMA on this time frame, indicating that the path of least resistance is to the upside. The gap has widened, reflecting stronger bullish momentum. Price appears to be breaking below the 200 SMA dynamic support, though, so a break below the Fibs could take USDCAD to the next support at the swing low.
The Canadian dollar got a boost from stronger oil prices when newswires showed that the OPEC Secretary General is scheduling meetings with energy ministers from Iran, Venezuela, Ecuador, and Russia to come up with an output deal before the official meeting later this month.
However, a few countries have already expressed hesitation about cooperating and are even ramping up production ahead of an anticipated cap. With that, the cartel could still fail to come up with an agreement, possibly leading to another wave lower for crude oil.
Meanwhile, the US dollar has extended its gains after retail sales data beat expectations for October and saw upgrades for the previous month. CPI and PPI are still lined up for the week, along with a speech from Fed Chairperson Yellen.
By Kate Curtis from Traderâs Way
A few days back, EURJPY broke out of its range visible on the 4-hour time frame and reached a high of 117.50. From there, price showed signs of a retracement and applying the Fib tool on the latest rally shows that the 38.2% level is close to the broken range resistance at 116.00.
The 100 SMA is above the 200 SMA so the path of least resistance is to the upside, which suggests that the rally could resume at some point. The moving averages could also hold as dynamic support near the 50% Fib.
Stochastic is heading down for now so sellers are in control of price action and could allow the correction to continue. Once the oscillator reaches the oversold area and turns higher, buyers could return to the game.
The euro has been turning lower against most of its peers as traders anticipate political uncertainty during the Italian referendum. Although this wonât likely result in the country leaving the euro zone, it could still have repercussions on the countryâs banking sector and economic outlook.
There were no reports out of the euro zone yesterday while today has the final CPI readings due. Any downgrades could put more weight on the shared currency. The ECB minutes are also up for release today.
As for the yen, there have been no major reports released recently so the lower-yielding Japanese currency has been moving to the tune of market sentiment. Risk-off flows could continue to favor the yen while a return in risk-taking could lead to losses.
By Kate Curtis from Traderâs Way
GBPAUD has been trending lower, moving inside a descending channel on its 4-hour chart. The recent rally has allowed price to test the channel resistance once more, possibly bringing it back down to the lows at the 1.5800 handle or until the channel support.
Price is also finding resistance around the 50% Fibonacci retracement level at the 1.6800 mark, which lines up with a broken support. However, the 100 SMA seems to be crossing above the longer-term 200 SMA to indicate that buyers are about to take control of price action.
Stochastic is indicating overbought conditions, though, so a downward move might be due. In this case, bearish pressure could pick up and force the rally to reverse. A break past the 61.8% Fib, on the other hand, could confirm that bulls have won over.
UK retail sales came in much stronger than expected, reflecting a 1.9% jump in consumer spending versus the projected 0.5% uptick. The previous report was also upgraded to show a 0.1% uptick from the previously reported flat reading.*
Prior to this, UK reports were mostly weaker than expected, as the CPI reports printed declines instead of small upticks from the poundâs depreciation. Jobs data was also weaker than expected as claimants rose but the jobless rate improved to record lows.
Meanwhile, data from Australia was also weaker than expected, as the employment change report showed a 9.8K increase versus the projected 20.3K gain. There are no reports due from Australia or the UK today but BOE members have testimonies lined up.
By Kate Curtis from Traderâs Way
EURAUD has formed a double bottom on its 1-hour time frame, signaling that price may be tired from its drop. The pair has yet to break past the neckline around 1.4550-1.4600 before confirming the potential climb.
The chart pattern is approximately 400 pips tall so the resulting breakout could be of the same size. However, the 100 SMA is below the 200 SMA to show that the path of least resistance is to the downside. Stochastic is also indicating overbought conditions, which means that buyers need to take a break and let sellers take over from here.
In that case, EURAUD could make its way back to the nearby support at the 1.4100-1.4150 area. A bounce off this region could trigger another test of resistance while a surge in bearish pressure could spur a breakdown.
The euro is currently weighed down by concerns about the French elections and Italian referendum. Over the weekend, former French President Nicholas Sarkozy lost the majority and has endorsed Francois Fillon who will go head to head with Le Pen, who is rumored to push for a French exit from the euro zone.
Data from Australia has been mostly weaker than expected, with the RBA minutes hinting that an accommodative policy stance could be maintained. Aside from that, yuan devaluation also appears to be dampening the Aussieâs gains since this move is keeping a lid on iron ore prices abroad.
The euro zone has flash PMI readings lined up this week while Australia has its quarterly construction work done report due for release. Market sentiment could play a key role in price action as it had for the past few weeks.
By Kate Curtis from Traderâs Way
USDCAD seems to be tired from its climb, as a double top pattern formed on its 1-hour time frame. Price is still testing the neckline at the 1.3400 major psychological level before conrfirming this reversal signal.
A break below the 1.3400 neckline could push the pair down by at least 150 pips or the same height as the chart formation. On the other hand, if support holds, another move towards the 1.3550 area could take place.*
The 100 SMA just crossed below the longer-term 200 SMA so the path of least resistance is to the downside. However, stochastic seems to be turning up so a return in buying pressure could be seen.
The Canadian dollar is relying on crude oil price rallies for now, as optimistic expectations for an OPEC output deal are currently shoring up prices. In the technical talks this week, sources are saying that there has been some progress even though some concerns about Iran remain. They also noted that several members are willing to give Iran some flexibility with its production levels to make up for lost output when sanctions were still in place.
As for the dollar, Fed Chairperson Yellen strengthened hopes for a December rate hike in last weekâs testimony. She explained that the central bank would need to tighten monetary policy to give room for increased fiscal stimulus without running the risk of an overheating economy.
FOMC minutes are up for release this week and this could further boost hopes for a Fed hike next month. However, this may have been long priced in so traders might have a larger reaction to OPEC-related updates ahead of the November 30 meeting.
By Kate Curtis from Traderâs Way
AUDUSD recently broke below the descending triangle support visible on its 4-hour time frame. Price found support near the .7300 major psychological level then started to pull up. Applying the Fib tool on the latest swing high and low shows the potential correction levels.
The 61.8% Fibonacci retracement level is closest to the broken triangle support around the .7600 handle while the 38.2% Fib is near a broken support at .7500. The 100 SMA crossed below the longer-term 200 SMA to indicate that the path of least resistance is to the downside, and these moving averages coincide with the 61.8% Fib to add to its strength as a ceiling.
Stochastic is already indicating overbought conditions, which means that buyers are already getting exhausted. Once the oscillator turns down from the overbought region, sellers could take control and push AUDUSD back to the .7300 lows or lower.
Earlier today, Australia reported a 4.9% slump in construction work done for the third quarter. This was much worse than the estimated 1.5% slide, indicating weaker demand for metals and other raw materials.*
Meanwhile, medium-tier reports from the US economy have been stronger than expected. Last week, Fed Chairperson Yellen confirmed the strong likelihood of a December rate hike since theyâd need to adjust monetary policy to give room for increased fiscal stimulus from the incoming Trump administration.
Up ahead, FOMC minutes are up for release but this might not have much of an impact since this meeting took place weeks ago. Profit-taking ahead of the Thanksgiving long weekend is expected so AUDUSD might pull up higher before resuming its drop. US durable goods orders are also lined up today.
By Kate Curtis from Traderâs Way
USDCAD appears to be starting a new trend down, creating a downtrend channel on its 1-hour time frame. Price just bounced off the 1.3400 support area and is making its way back up to the resistance at 1.3500.
The 100 SMA is below the 200 SMA so the path of least resistance is to the downside. Stochastic is indicating overbought conditions and has crossed lower, also suggesting that price could resume its slide.
However, price is above the moving averages at the moment so the bearish pressure isnât that strong. Also, the gap between the moving averages is pretty narrow so the indicators could merely be oscillating to reflect range-bound action.
The FOMC minutes confirmed that majority of policymakers think itâs appropriate to hike interest rates relatively soon. Many cautioned that the economy runs the risk of overheating if they donât tighten monetary policy before reaching full employment, citing that a rate hike would also support the Fedâs credibility.
Crude oil still seems to be supported, as Iraq has expressed willingness to cooperate in an OPEC output deal. According to their Prime Minister, they can make up for revenue with higher oil prices even with lower volumes. Also, crude oil inventories indicated a surprise draw of 1.3 million barrels versus the estimated buildup of 0.3 million barrels.
Data from the US economy has been mixed, although durable goods orders posted impressive gains. US banks are closed for the Thanksgiving holiday today so profit-taking could force the dollar to retreat.
By Kate Curtis from Traderâs Way
EURGBP has been trending lower on its short-term time frames, moving inside a descending channel on the 1-hour chart. Price is currently testing the range support and might be due for a bounce back to the resistance around the .8560 levels.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, these moving averages are around the middle of the channel so they might hold as near-term resistance.
Stochastic is heading up to show that buyers are in control of price action for now. Once the oscillator reaches the overbought zone and turns lower, sellers could regain control and push price back down, perhaps even spurring a break below support.*
Economic data from the euro zone has been mostly upbeat this week, with majority of the flash manufacturing and services PMIs coming in better than expected. German Ifo business climate data yesterday showed no change at 110.4 versus the estimated rise to 110.6.
As for the UK, the governmentâs Autumn Forecast Statement appears to have reassured businessmen and investors that fiscal support can keep the economy afloat during the Brexit. The Chancellor assured that they wonât be cutting pension benefits and that theyâll increase spending on infrastructure as well.
The UK second GDP estimate is up for release today and no change from the earlier 0.5% estimate is eyed. Preliminary business investment data is also up for release and a strong increase could boost confidence in the UK economy while a drop sharper than the expected 0.2% decline could mean losses for the pound.
By Kate Curtis from Traderâs Way
USDJPY is trending higher on its 1-hour chart, moving above an ascending trend line connecting the latest lows of price action. Price is currently testing this support area, which lines up with the 61.8% Fibonacci retracement level and the 100 SMA dynamic inflection point.
A bounce off this trend line and area of interest could spur a move back up to the swing high near the 114.00 handle. On the other hand, a break lower could lead to a test of the next area of interest at the 110.00 handle, which lines up with a former resistance and the 200 SMA.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. Stochastic is on the move down to show that bears are in control of price action but the oscillator is already dipping into the oversold zone to suggest that selling pressure is about to be exhausted.
US traders are set to return from their Thanksgiving holiday and might be ready to provide a fresh boost for the Greenback. There are no US reports on the docket today, as the main event risks are the US preliminary GDP release on Tuesday and the non-farm payrolls report due on Friday.
Fed rate hike expectations could continue to keep the dollar afloat in the coming weeks, unless economic data severely disappoints. Leading jobs indicators such as the ADP non-farm employment change and ISM manufacturing PMI release could provide clues on how the NFP report might turn out.
As for the yen, Japanese data came in line with expectations last Friday and showed a 0.4% fall in price levels for both Tokyo and the national level. Household spending, retail sales, and unemployment rate figures are lined up today and downbeat results could mean more yen weakness.
By Kate Curtis from Traderâs Way
GBPUSD has been moving sideways, finding support around 1.2365 and resistance at the 1.2500 major psychological level. Price is making its way back to support after a recent bounce from the top of the range.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside, which suggests that the bottom of the range could keep losses in check. Stochastic is also turning up from the oversold area to indicate a return in buying pressure.
However, a surge in bearish momentum could trigger a break below the range support and a 135-pip drop for the pair, which is roughly the same height as the rectangle formation. Similarly, a break past the top of the range could yield at least 135 pips in gains.
Event risks for the day include the US preliminary GDP release, which could see an upward revision from 2.9% to 3.0% for Q3. The CB consumer confidence index is also due and a rise from 98.6 to 101.3 is expected.
Only medium-tier reports are lined up for the pound today, as the main UK event for the week is set for Wednesday when the BOE bank stress test results will be released. BOE Governor Carney will also provide an assessment of financial risks, which would likely include his take on the Brexit.
Keep in mind that Carney has been reiterating his anti-Brexit sentiments recently, holding meetings with top finance and business leaders in the UK to lobby for an extension before PM May invokes Article 50. He would likely use this weekâs Financial Stability Report as a platform to highlight the Brexit risks to banking and businesses.
By Kate Curtis from Traderâs Way
USDCAD is still trending lower, moving inside a descending channel on its 1-hour chart and bouncing off resistance. Price is now making its way back down towards support at the 1.3300 to 1.3350 area, although it could encounter a near-term floor at 1.3400.
The moving averages are oscillating so the range-bound action could continue. The 100 SMA is slightly above the longer-term 200 SMA so the path of least resistance is to the upside, suggesting that another test of resistance could be in the cards.
Also, stochastic is heading up from the overbought zone to indicate that buyers are regaining control of price action. Price could move up to the 1.3480 area or the top of the channel and perhaps attempt to break higher, depending on the event risks.
Data from the US came in stronger than expected, as the Q3 GDP reading was upgraded from 2.9% to 3.2% while the CB consumer confidence showed a large jump this month. On the other hand, Canadaâs current account deficit came in wider than expected.
Canadaâs monthly GDP reading is due today and a 0.1% uptick is eyed, lower than the earlier 0.2% expansion. However, the bigger driver of price action could be the OPEC meeting, as an output deal could mean strong gains for the oil-related Loonie.
For now, energy ministers donât seem ready to reach a deal yet, as Iran has stated that it wonât participate in a production cut. Iraq mentioned that it wonât cooperate unless all the other members are on board. The lack of an agreement could mean more losses for oil and the Canadian dollar.
By Kate Curtis from Traderâs Way
USDJPY continues to trend higher, moving above a rising trend line on its 1-hour time frame. Price recently broke past the resistance around the 113.50 minor psychological level and zoomed up to the 114.50 area before pulling back.
Applying the Fib tool on the latest swing low and high shows that the 61.8% Fib is close to the 113.00 handle while the 38.2% Fib is closer to the previous swing high. If any of these levels hold as support, price could make its way back to the previous highs and beyond.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. Also, the 100 SMA is near the rising trend line, adding to its strength as support. Stochastic is turning down from the overbought zone, though, so sellers are taking control while buyers are taking a break.
Economic data from the US was mostly upbeat yesterday, as the ADP non-farm employment change reading hinted at an upside NFP surprise while the Chicago PMI posted a sharp climb. Personal income was higher than expected but personal spending lagged.
Earlier today, Japan reported a small upgrade in its final manufacturing PMI from 51.1 to 51.3 to reflect a slightly faster pace of expansion in the industry. Prior to this, preliminary industrial production missed estimates of a 0.2% increase and posted a 0.1% uptick instead.
US initial jobless claims and ISM manufacturing PMI are up for release, setting the tone for Fridayâs NFP report. A stronger than expected read could seal the deal for a December Fed rate hike, although this scenario appears to have been well-priced in already.
By Kate Curtis from Traderâs Way
GBPJPY has been on a steady uptrend, moving above an ascending trend line connecting the latest lows of price action on its 1-hour chart. Price has surged past the 145.00 mark before showing signs of a pullback and applying the Fib tool on the latest swing low and high shows that the 61.8% level lines up with an area of interest or former resistance at 141.00.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, the 200 SMA coincides with the rising trend line, adding to their strength as a floor. The 100 SMA coincides with the 61.8% Fib, although a shallow correction could already see a bounce off the higher Fib levels.
Stochastic is on the move down to show that sellers are in control of price action for now. However, the oscillator is already nearing the oversold level to suggest weakening bearish pressure and a potential return for buyers.
Economic data from the UK was weaker than expected yesterday, as the manufacturing PMI fell from 54.2 to 53.4 to reflect slower industry growth instead of rising to the projected 54.4 figure. UK construction PMI is due today and a drop from 52.6 to 52.3 is eyed.
Data from Japan was mixed, as the final manufacturing PMI saw an upgrade from 51.1 to 51.3 while capital spending sank 1.3% in Q3 versus the projected 0.4% dip. Yen weakness still seems to be a prevailing theme, as it has been for the past few weeks.
There are no major reports lined up from Japan for the rest of the day, although the US NFP release could have an impact on overall market sentiment and yen demand. Significantly strong results could draw more traders to the dollar on rate hike expectations and away from the lower-yielding yen.
By Kate Curtis from Traderâs Way
USDCAD is trending lower, moving inside a descending channel on its 1-hour time frame. Price just bounced off the channel support and is making its way up to the resistance at the 1.3400 major psychological level.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. Also, the 200 SMA lines up with the 61.8% Fib and channel resistance, adding to its strength as a ceiling. The 100 SMA is closer to the 50% Fib, which might keep gains in check as well.
Stochastic is on the way up to show that buyers are still in control of price action for now, but the oscillator is already approaching the overbought zone so a return in selling pressure might be due, possibly leading to another test of channel support at the 1.3250 area.
Last week, the OPEC leaders agreed on their first output deal in nearly a decade, deciding to lower production levels in an effort to keep oil prices supported. This could lead to more gains for Canadaâs struggling energy sector, supporting spending and employment as well.
The BOC is set to make its monetary policy statement later this week and probably keep interest rates on hold for the time being. Jobs figures came in better than expected on Friday, as the economy added 10.7K positions instead of losing 16.5K workers. The unemployment rate also improved from 7.0% to 6.8%.
As for the US, the NFP reading was in line with expectations of a 177K gain while the unemployment rate fell from 4.9% to 4.6%. However, average hourly earnings slipped by 0.1% instead of posting the estimated 0.2% gain. Still, this might not be enough to dampen Fed rate hike expectations this month.
By Kate Curtis from Traderâs Way
EURUSD made such a strong rally in recent trading and might be due for a quick pullback ahead of top-tier events. Applying the Fib tool on the latest swing high and low on the 1-hour chart shows that the 50% level lines up with the broken near-term resistance at the 1.0650 minor psychological level.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. However, stochastic is heading south from the overbought zone to show that bears might take control of price action from here.
The moving averages are close to the 61.8% Fib so they might hold as dynamic support as well. A break below the Fibs could lead to a drop to the swing low near 1.0500 while a bounce could spur a test of the swing high near 1.0800 or higher.
The shared currency shrugged off its losses after the Italian referendum as tradersâ fears were calmed by the idea that PM Renzi could delay his resignation until the budget is passed, easing a few fiscal concerns in the country. Also, reports that Greekâs creditors could restructure debt upon evaluating the progress on economic and financial reforms in the country also supported the euro.
The dollar didnât have much of a reaction to mostly stronger than expected US economic data, as traders have already priced in the idea of a Fed rate hike. Bulls could book profits soon in anticipation of Fed remarks emphasizing that they wonât be tightening again anytime soon.
The ECB statement is scheduled for later this week so this should add to EURUSD volatility. Traders are expecting the central bank to increase or more likely extend its QE program in order to help the economy achieve its inflation targets sooner.
By Kate Curtis from Traderâs Way
