Morning outlook - EUR/USD breaks upwards
In result of a decrease of the American unemployment rate, traders tried to push the pair through the bottom trend-line of a large falling wedge pattern. However, it made a rebound and in the early Monday morning left the formation in the northern direction.
The surge was not sharp, as the pair still needs to cross a combination of the upper edge of a junior descending channel and the 200-hour SMA. In addition to that, it stuck near the updated weekly PP at 1.1740 that is backed up by the 100-hour SMA.
These obstacles as well as the Friday’s jump by 34 basis points just in hour suggest that the rate is likely to retreat for some time. An aggregate of technical indicators support this scenario. In addition to that, market sentiment remains 57% bearish.
In result of a decrease of the American unemployment rate, traders tried to push the pair through the bottom trend-line of a large falling wedge pattern. However, it made a rebound and in the early Monday morning left the formation in the northern direction.
The surge was not sharp, as the pair still needs to cross a combination of the upper edge of a junior descending channel and the 200-hour SMA. In addition to that, it stuck near the updated weekly PP at 1.1740 that is backed up by the 100-hour SMA.
These obstacles as well as the Friday’s jump by 34 basis points just in hour suggest that the rate is likely to retreat for some time. An aggregate of technical indicators support this scenario. In addition to that, market sentiment remains 57% bearish.
Comment:
EUR/USD climbs to test 1.1832
In line with expectations, the Euro continued to appreciate against the Dollar yesterday. The reason behind the surge was related not only to combined support formed by the 55-, 100- and 200-hour SMAs together with the weekly PP, which the pair used as a trampoline, but also to the fact that Catalonia signed but immediately suspended declaration of independence to bargain with Madrid.
Accordingly, in the first half of the day the currency rate is expected to test a resistance located near the 1.1830 mark. Historically, this area proved to a significant barrier for the pair. From this perspective, there is a chance that it would halt the soar and make a short term rebound. In the meantime, there is a need to take into account an effect from the FOMC meeting, which is likely to strengthen the Dollar.
In line with expectations, the Euro continued to appreciate against the Dollar yesterday. The reason behind the surge was related not only to combined support formed by the 55-, 100- and 200-hour SMAs together with the weekly PP, which the pair used as a trampoline, but also to the fact that Catalonia signed but immediately suspended declaration of independence to bargain with Madrid.
Accordingly, in the first half of the day the currency rate is expected to test a resistance located near the 1.1830 mark. Historically, this area proved to a significant barrier for the pair. From this perspective, there is a chance that it would halt the soar and make a short term rebound. In the meantime, there is a need to take into account an effect from the FOMC meeting, which is likely to strengthen the Dollar.
Comment:
EUR/USD soars to monthly PP at 1.1875
The common European currency continues to advance against the US Dollar four days in a row, fluctuating in a junior ascending channel. As some of the FOMC members were still uncertain about necessity of interest rate hike in December, the pair gained an impulse to reach the monthly PP at 1.1875.
The fact that an average market sentiment became 69% bearish points out on an upcoming turnaround. Similar signal show certain technical indicators suggesting that the rate is overbought. On the other hand, there is a need to take into account that the pair is also moving and tends to reach the upper boundary of a large descending channel.
In other words, whether the rate makes a rebound on continues the surge will greatly depend on the US PPI release and reaction on Mario Draghi speech.
The common European currency continues to advance against the US Dollar four days in a row, fluctuating in a junior ascending channel. As some of the FOMC members were still uncertain about necessity of interest rate hike in December, the pair gained an impulse to reach the monthly PP at 1.1875.
The fact that an average market sentiment became 69% bearish points out on an upcoming turnaround. Similar signal show certain technical indicators suggesting that the rate is overbought. On the other hand, there is a need to take into account that the pair is also moving and tends to reach the upper boundary of a large descending channel.
In other words, whether the rate makes a rebound on continues the surge will greatly depend on the US PPI release and reaction on Mario Draghi speech.
Although many technical indicators pointed out on recovery of the Dollar, the pair eventually made a breakthrough in the opposite direction. The surge was mainly based on better than expected German Industrial Production data and hawkish comments from the ECB official. As a result, the pair returned to the 1.1780 level, from which it started to rapidly fall last Thursday.
From technical perspective, now the rate is located above both moving averages and retracement level, which means that the surge could continue towards the weekly R1 at 1.1810. On the other hand, there is couple of fundamental factors that should be beard in mind, as they might notable affect valuation of the Euro. This list includes not only the EU Finance Ministers meeting in Brussels but also possible Catalonia’s declaration of independence.