EURO/DOLLAR SELL RECOMMENDATION ISSUED AT 1.3635 FOR WEDNESDAY
Fundamental Catalyst – We have seen dovish comments out from a number of ECB officials this week with Trichet, Weber, and Orphanides all indicating that there is room for more accommodation from the central bank, while Almunia has said on Tuesday that the ECB could even consider adopting quantitative easing if necessary. It is our belief based on the current state of the global economy that it will indeed be necessary for the ECB to adopt some form of quantitative easing which should ultimately weigh on the Euro. Additionally, any sign of resumption in equity selling, should also weigh on the major which has been positively correlated with US equity prices.
Techs – Eur/Usd: The market looks like it could be in the process of attempting to carve out a medium-term lower high by 1.3740 (19Mar high) with daily studies rolling over from overbought. We classify the latest upside moves as corrective with the overriding trend still intensely favoring the USD. Nevertheless, trade remains quite choppy at current levels and we are more comfortable selling into rallies rather than on downside breaks. If we miss the opportunity, then we will stand aside and wait for the next one. Ideally, we are now looking for a fresh daily lower top below Tuesday’s low. Strategy: SELL @1.3635 FOR A 1.3310 OBJECTIVE, STOP @1.3755. Stops to be trailed to cost (break-even) on a break back below 1.3585. If trade triggers and 1.3585 not broken, position to be closed out at NY close (5pm EDT) on Wednesday. Recommendation to be removed if not triggered by NY close on Wednesday.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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