25 March, 2015
EURUSD has risen over the last two weeks after the Fed Chair Yellen said in her statement that there are worries over the export growth in the US economy due to the strong dollar. Yesterday’s new home sales and CPI figures could didn’t help the pair to push through the resistance at 1.1040.
The dollar rallied in the aftermath of the warmer U.S. inflation report, quickly sold off from there, then dragged itself up through the remainder of the morning session. EURUSD fell to 1.0936 from 1.0995 after the CPI data, before climbing to session highs of 1.1029, and then falling to session lows of 1.0890. U.S. new home sales rebounded 7.8% to 539k in February, much better than expected and the strongest since April 2008. Back months were revised with January boosted to 500k from 481k previously, while December’s 482k was nudged down to 479k. The February overall-CPI was 0.2% (median 0.2%), while the core index was 0.2% (median 0.1%). Year over year growth accelerated to unchanged from -0.1% and the core y/y growth held at 1.7%. January’s was the slowest pace of y/y growth since -0.2% in October ’09. Energy prices grew 1.0%, with a 2.4% gasoline price increase. Food prices were 0.2% after after remaining unchanged last month.
The monthly chart reveals an important trendline support in the region of the recent bounce from 1.0459. This could be a supporting element that keeps the pair from plummeting to parity for some time, especially so if the Fed continues using dovish language in their statements. Important weekly support level in the weekly chart is at 1.0459 while the resistance levels are at 1.1098 and 1.1460.
A daily shooting star candle suggests the pair will move lower today. High Stochastics value supports the view. If the market rallies today levels closer to yesterday’s high would be attractive shorting levels.Support area from 1.0460 to 1.0620 is a reasonable target but it would make sense to close the short trades as price approaches the level at some 20 pips higher.
EURUSD, 240 min
The pair has moved sideways above the 1.0883 support and over the last two candles below the ascending trendline. The 4h Bollinger Bands (currently at 1.0988 and 1.0240) would be preferable shorting levels but should the support break before price rallies, then smaller timeframe price action should be used to enter the short trades as per my teaching in the webinars.
EURUSD, 60 min
The resistance (red line) at 1.0938 has been resisting moves higher this morning while EURUSD has made higher lows above the lower Bollinger Bands. This suggests that pressure is building against the 1.0938 minor resistance level and price might well rally towards the potential sell area at 4h Bollinger Bands.
Price reacting lower from a resistance and creating a Shooting Star candle indicates weakness. However, price trading at support and creating higher lows suggests that price might well move higher today and provide an opportunity to look for short signals at 4h Bollinger Bands.
Chief Market Analyst
Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.
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