EURUSD: shorting the euro crosses

27 March, 2019

On Tuesday the 26th of March, the euro hit a new weekly low after an unsuccessful attempt at breaking the trend line. During the European session, the pair’s drop was brought about by a decline on the EURGBP cross as a result of news concerning Brexit. Pressure increased during the US session on the back of increased demand for the dollar. The greenback also got a boost from a rise in US 10-year bond yields.

I’ve long been under the impression that the statements of various officials are carefully planned to bring about price fluctuations on the markets at a certain time. While they may seem random from the sidelines, randomness is just a pattern you haven’t yet recognised.

Any official can give their personal opinion on a hot topic and have a marked influence on the market. They don’t face any consequences for this verbal manipulation of the market as they are simply expressing an opinion. Nevertheless, these expressions destabilise markets.

The EURUSD pair is trading down on the 21st of March, while the GBPUSD pair is trading up. The trajectories of these pairs have diverged, but we can expect them to converge again in the near future.

The pair fulfilled one third of my forecast yesterday. The breakout of the trend line turned out to be false. My predicted scenario became unworkable after the rate dropped below 1.1300. The euro bears improved their positions on the back of a strengthened dollar as they pushed the bulls back to 1.1251 (70% of the upwards movement from 1.1176 to 1.1448). Judging by trading volumes, this is a key support level. If the bears take it during the European session, I don’t think that the 67th degree will be able to withstand them and the pair will slump to 1.1222.

I wrote above that the highly correlated EURUSD and GBPUSD pairs have diverged. Now it’s time to find a balance point between them so that they can start moving in the same direction again. Either the pound will drop, and the euro will stay at 1.1257 and wait for the pound to catch up, or the euro will shoot upwards and the pound will keep trading at 1.3180.

I’ve decided not to make a prediction today pending further developments on Brexit and given the upcoming trade talks between the US and China (a new round of talks is set to take place on the 28th and 29th of March in China). I’ll simply state my target levels: 1.1220 (target for bears), and 1.1293 (target for bulls; the LB and trend lines).


Source link   Presented by Alpari

Bears have broken the trend line

On Tuesday the 14th of May, trading on the euro closed down. The EURUSD pair dropped from 1.1243 to 1.1201. The 45th degree provided some...

EUR/USD looks to German CPI

The pair climbs to fresh weekly highs beyond 1.1200. EMU advanced Q1 GDP surprised to the upside. German flash inflation figures next of relevance...

USD bid hgher as new home sales rises

The USD traded higher on Tuesday, rising to a six-week high. The new home sales report showed a 4.5% increase on a month over month basis, beating...


EURUSD expect a test of 1.1230

With a thin market, the bulls managed to push through to 1.1262. A correction occurred within a relatively narrow price range. At the time of writing, the...

EURUSD: the Easter holidays continue

Most of the majors closed last week down against USD. The Swiss franc fell by 1.15%, the Kiwi dollar by 1.12%, the pound by 0.55%, the euro by 0.49%...

EURUSD: bulls have returned to 1.13

On Tuesday the 16th of April, trading on the euro closed down. The EURUSD pair was knocked off its perch of 1.1314 by Reuters, which reported...


EURUSD: bulls ready to test 1.13

On Thursday the 11th of April, trading on the EURUSD pair closed down, with the single currency dropping to 1.1250. To me, this seemed to be...

EURUSD: sideways motion expected

On Wednesday the 10th of April, trading on the euro closed up. Volatility was high on all currency pairs with the euro, especially during ECB President...

EURUSD stabilised at 1.12 ahead of ECB

On Tuesday the 9th of April, trading on the euro closed slightly down. On the back of Brexit rumours and the rising crosses, the EURUSD pair jumped...

  


Share it on:   or