EUR/USD Rate the talking points
EUR/American dollar trades near last week’s high (0.9854) on the back of American dollar weakness, but the recent rally in the FX appears to be stalling in front of the old support zone around the July low (0.9952) as it struggles to extend last week’s run of higher highs and higher lows.
EUR/USD Rate Rebound Struggles Ahead Of Old Support Zone
EUR/USD seems to have turned around after the failed attempt to test the June 2002 low (0.9303) as the Relative Strength Index (RSI) rebounds from oversold territory, and the exchange rate may attempt to test the 50-Day SMA (1.0016) if it manages to push back above the old support zone around the July low (0.9952).
However, EUR/USD may continue to follow the negative slope at the moving average, as the Federal Reserve follows a tightening policy, and the September meeting of the European Central Bank (ECB) may do little to influence the exchange rate. , as the Governing Council “advances the transition from the predominantly accommodative level of policy rates to levels that ensure the timely return of inflation to our medium-term target of two percent.”
The comments suggest that the ECB will normalize monetary policy at a slower pace as the central bank acknowledges that “risks to growth are mainly to the downside”, but the larger-than-expected rise in the Consumer Price Index (CPI) for the euro area can force the president cristina lagarde and Co. to deliver another 75 bps rate hike at the next meeting on Oct. 27, as the Governing Council commits to “following a meeting-by-meeting approach.”
Until then, EUR/USD may find it difficult to sustain the bounce from the yearly low (0.9536) if the old support zone around the July low (0.9952) acts as resistance, while the slope in retail sentiment appears to be at hand. about to persist as traders have been net. -Long the pair during most of the year.
the IG Customer Feedback Report shows that 59.33% of traders are currently net-long EUR/USD, with a long-to-short ratio of 1.46 to 1.
The number of net long traders is 3.83% higher than yesterday and 22.54% lower than last week, while the number of net short traders is 9.45% higher than yesterday and 57.57% higher than last week. The decline in net long has helped ease the agglomeration behavior as 74.79% of traders were net long EUR/USD last week, while the jump in net short comes as EUR /USD struggles to extend series of higher highs. and last week’s lows.
That said, the ECB meeting count may do little to influence the short-term outlook for EUR/USD, with the Governing Council showing limited interest in tightening policy, and the rebound from the yearly low (0.9536) may end. short-lived if the old support zone around the July low (0.9952) acts as resistance.
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EUR/USD daily trading chart
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- EUR/USD seems to have turned around ahead of June 2002 low (0.9303) amid failed attempt to break/close below 0.9530 area (61.8% expansion), with the Relative Strength Index (RSI) highlighting a similar dynamic as it recovers from oversold territory.
- A move above the 0.9910 region (78.6% retracement) to 0.9950 (50% expansion) may push the EUR/USD towards the 50-day SMA (1.0016), but the exchange rate may continue the downward slope at the moving average if the former support zone around the July low (0.9952) acts as resistance.
- The lack of momentum to pull back above the 0.9910 region (78.6% retracement) to 0.9950 (50% expansion) may lead to another rally in the 0.9530 area (61% expansion, 8%), with a break/close below the Fibonacci overlay around 0.9380 (261.8%). expansion) to 0.9430 (261.8% expansion) putting the June 2002 low (0.9303) on the radar.
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— Written by David Song, Currency Strategist
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