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EUR/GBP - Rally Stalls But Breakout Still PossibleThe euro has been on an impressive run against the pound recently and as you'd expect, the rally stalled around the 200/233-day SMA band. But it may not be over yet. The pair was always likely to see significant resistance here, having done so in the past, but the important thing is what follows next. It's worth noting that the Bank of England and European Central Bank will both announce their latest interest rate decisions on Wednesday, with the latter also providing new economic forecasts and perhaps some insight into what, if anything, will replace the PEPP program in March. This will surely have a huge role to play on where the pair breaks next. With the pair pulling back, the key test below is 0.85, where the December lows coincide with the 50 fib level - November lows to December highs - and the 200/233-period SMA band on the 4-hour chart. A move below here could tip momentum back in the favour of the sellers and see the pair resume its long-term downward trend. If this level holds, we could see another run at last week's highs, and, who knows, the pair could be heading into the new year on a much more bullish note.
by OANDA
1
EUR/USD - Consolidation Ahead of Fed and ECBIt would seem EURUSD is in consolidation ahead of the Fed and ECB events this week. It appeared to be flirting with a breakout higher but it wasn't long until bulls abandoned ship, ahead of the recent highs in fact, in a sign that they had little confidence of achieving a substantial breakout ahead of the rate decisions. Given the amount of uncertainty around both, not to mention omicron, it's perhaps not too surprising that we aren't seeing a more significant breakout at this stage. The Fed could accelerate its tapering but in the absence of concrete data on the new variant, it may be hesitant to offer too much on interest rate guidance. Of course, the dot plot means we will get a much better grasp and I expect forecasts will be much more hawkish, but we could see a strong sprinkling of dovish caveats. The ECB is in a similar, albeit less pressured, situation. They don't quite seem prepared to retire transitory yet but there's one big question on everyone's lips. What will replace PEPP in March? Can it be extended now that there's a new variant running wild? With so many questions to be answered, we could be in for a couple more days of consolidation, after which, a breakout may follow. The notable levels above and below remain largely the same, with 1.12 below the major support level and 1.14 above key resistance. There may be a giveaway prior to this, with a break of the recent highs (1.1320) or lows (1.1260) perhaps signalling a shift, but a break of the earlier levels will be more significant.
by OANDA
EURGBP: Support break can lead to further losses!EURGBP as seen has likely rejected the long term descending daily trendline and now has eyes to move lower. To confirm this move, the daily candle needs to close below 0.84900 support which would open the door to further drop towards the next support located at 0.83800. The stop loss can ideally be placed above the long term daily descending trendline to achieve 1:1 RISK TO REWARD RATIO. My analysis is not meant to be a trading signal nor financial advice! Its highly advisable to perform your own analysis and trade markets at your own risk. Please LIKE & FOLLOW if you found this analysis helpful in assisting with your own personal analysis. Cheers
Short
by FX618Analysis
EURAUD: Nice long setupLooks like we have a 2.61R potential trade in the Euro vs the Aussie dollar here. I'm long, thinking it can easily hit the target zone, considering that the $EURUSD down trend signal in the daily chart has panned out, $DXY hit the weekly target, and timing for a daily move in $EURUSD has elapsed, implying a possible mean reversion or reversal move in that pair. $AUDUSD is acting weak, and the ratio shows a good reward to risk high probability Time@Mode setup. Seems like an easy win. Best of luck! Cheers, Ivan.
Long
by IvanLabrie
2
Euro punches above 1.12The euro has reversed directions and is back above the 1.1200 level. EUR/USD is trading at 1.1222, up 0.19% on the day. Where is ECB policy headed? That is no easy question, as we are getting mixed messages from ECB officials. Governor Christine Lagarde has pushed back against market bets of a rate hike in late 2022. Earlier this month, Lagarde said that it was 'very unlikely' that the ECB would raise rates in 2022, as inflation was too low. Contrast this stance with that of ECB member Isabel Schnabel, who said this week that "risks to inflation are skewed to the upside". It is unusual to hear a hawkish view from the dovish ECB, and the markets factored in a 0.10% rate increase in December 2022 following Schnabel's comments. There is also uncertainty as to the future of the ECB pandemic bond-buying program (PEPP). The bank is expected to announce at its December meeting that it will end bond purchases at the end of March. This stance was reiterated in the ECB minutes on Thursday, which said that based on current developments, the ECB expected to wind up purchases in March. However, on Wednesday, ECB member Robert Holzmann said that the bank could put the programme on hold rather than abolish it altogether. Holzmann's comments could be in response to the spike in Covid cases in Germany and other euro area countries. The ECB will have to tread carefully as it assesses the economic outlook. The spike in Covid in Germany and other eurozone countries could undermine the tenuous recovery, while at the same time inflation is at its highest level since 2008 and the ECB may have to reconsider its dovish policy in order to contain inflation. 1.1201 is a weak support line. This is followed by support at 1.1118 There is resistance at 1.1415 and 1.1546
by OANDA
EURCHF on its way to ATL1. Be aware that the SNB (Swiss National Bank) had set a minimum exchange rate of 1.20 CHF per EUR for some years to keep Switzerlands economy in place, because we rely on exports. 2. This synthetically set level can be seen in the period from 2012-2013 where the price basically did nothing for weeks and was just kept alive at that rate 3. On 15.01.2015 this synthetic minimum price was abolished and the price dumped instantly to under the equilibrium, even to 0.96 EUR per CHF. Historical moment! 4. Notice the bearish retest in 2018, what a beautiful rejection there at the last support from 2015. 5. Around start of the pandemic in march 2020 we had a bullish retest of support at bullish weekly OB indicated by the "tick" in green. 6. At the moment we broke this support and I am expecting another break and retest of this 3-month support @ 1.0418. 7. Last but not least, there is a big liquidity pool resting around the sell stops at 1.0234 , above and below. Probably will act as a magnet for price action and a big stop hunt happening there. CONCLUSION: --> EUR is at the brink of doom here, holding at the last support in its entire history to the Swiss Franc. --> the narrative behind the weakness of EUR is the non-stop-printing of new money during the pandemic caused by the ECB --> add the relatively stable condition of the swiss economy regarding the rest of europe into the mix, and you have enough reasons to sell your EUR to CHF As a swiss-based trader, wanted to have a look at my personal exchange rate for buying things abroad or taking bigger investments like land and real estate in cheaper european countries. Applying some fundamental knowledge here, but mostly the chart explains itself with its price action. Hope this chart gives some clarification and insight!
Short
by coinnection
5
EURUSD: Path to 1.11700 clear as INFLATION Dominates the marketsLast week's push in the USD strength led the EURUSD to breach 1.15000 crucial monthly support. As things stand, its not looking good for EUR on both technical and fundamental point of view. TECHNICAL ANALYSIS After the weekly candle closed convincingly below 1.15000 crucial monthly support, the path to the next low at 1.11700 remains clear and with near zero obstacles. The descending channel might likely act as a guide/pathway to 1.11700 and the weekly 50 EMA would likely act as a strong dynamic resistance in assisting the EURO falling towards it. Have a look at the main chart to get a clear picture of the technical analysis behind this analysis FUNDAMENTAL ANALYSIS What caused the breach of 1.15000 support? well the US inflation report last week very much did the job single handedly. Furthermore, the divergence in tightening monetary policy between FED and ECB remains quite distant. This would likely make it easier for the EURUSD to fall further. All in all, the EUR is likely to suffer more and more! The pathway to 1.11700 remains clear with least obstacles, thus making it likely to HIT in the coming weeks.
Short
by FX618Analysis
2
Euro dips to 3-week low as Fed trimsThe euro is down considerably in Thursday trade. Currently, EUR/USD is trading at 1.1550, down 0.53%. Earlier in the day, the euro fell to 1.1528, its lowest level since October 13th. There were no surprises from the Federal Reserve meeting, as policy makers trimmed the QE programme by 15 billion dollars/month. The move was nonetheless highly significant, as it marks the first tightening in policy since QE was introduced as a response to the economic downturn in early 2020 due to the Covid pandemic. Although the move was communicated to the markets in advance, it was unclear as to how much the Fed would trim, and an amount other than 15 billion dollars could have shaken up the US dollar. The Fed's move was aptly described as a 'dovish taper', in that the Fed continues to maintain a dovish stance as far as future rate hikes and inflation. Fed Chair Powell said after the meeting that the bank would remain patient and wait until the job market was stronger before raising rates, emphasising that the Fed would encourage job growth through low rates. As for inflation, Powell stuck to his well-worn script that the current bout of high inflation is "expected to be transitory" and will ease lower. Powell appears to be odds with the markets, which are far more hawkish and have priced in several rate hikes for 2022. Inflation has been running at 4% over the past five months (double the Fed's target) and it's becoming a stretch to argue that this is a transitory trend, with no sign that inflation will cool anytime soon. What is interesting is that other major central banks are also preaching patience and arguing that high inflation is transitory. Earlier today, the BoE surprised the markets by maintaining rates; the BoE had signalled that it would raise rates in order to contain inflation. However, the BoE echoed the Fed when it stated today that the factors causing high inflation were transient and that it expected inflation to ease in several months. The ECB is also singing from the same hymn sheet - the bank has projected that inflation will be "subdued" in the medium term, and earlier in the week, ECB President Christine Lagarde said that the bank had no plans to raise rates in 2022. There are resistance lines at 1.1658 and 1.1754 1.1501 is providing support. This line has held since July, but was under pressure earlier in the day. Below, there is support at 1.1440
by OANDA
EURUSD MIGHT CLIMB HIGHER IF THIS CHANNEL IS BREACHED!Currently EURUSD is confined into a nice clear descending channel. However as the price approaches crucial 1.15000 monthly support, the RSI is indicating positive divergence. If the daily candle clears the descending channel and D EMA, we could expect this pair to climb towards it next resistance of 1.19000. THIS JUST REPRESENTS MY ANALYSIS ON THIS PAIR AND ITS NOT A TRADE SIGNAL. I HAVE MANY PAIRS THAT I MONITOR AND ALL OF MY TRADES ARE ON W, D , 4H TIMEFRAME (SWING TRADES). ITS NOT POSSIBLE TO POST ALL OF MY ANALYSIS HERE, HOWEVER I POST TRADE SIGNALS WHEN THE CRITERIA IS MET ON THE FX PAIRS I MONITOR. FOLLOW & LIKE TO RECEIVE FREE FX SWING TRADE SIGNALS CHEERS.
Long
by FX618Analysis
EUR/USD - Edging Lower into the Fed MeetingPrice action at the back end of last week in EURUSD was chaotic to say the least. From Christine Lagarde putting across a dovish case for the central bank which the market completely disregarded to the dollar soaring on Friday on the back of a surprise spike in the employment cost index - an inflationary signal - we certainly saw plenty of action that we now have to make some sense of. At times like this, technical levels can often take a backseat as these economic events bring a significant element of unpredictability, as we saw. Now that the dust has settled, where do we find ourselves? For one, we're back inside the descending channel and the breakout that we saw on Thursday is barely relevant. It failed around a descending trend line just above the channel but that may not have been the case, if not for the data on Friday. What matters is what comes next. And what we're seeing currently is the rally back into the top of the channel losing momentum, which suggests another breakout may be a struggle. So the rebound off the mid-point of the channel may prove to be temporary support. The top of the channel coincides also with the bottom of the 55/89-period SMA bands on both the daily and 4-hour chart, which would suggest we're still in a bearish phase for the pair. The next test below is once again the October lows around 1.1524, where it failed to push below late last week. The fact it held up above here suggests there's still support for the pair but that may diminish if we continue to see it tested. Ultimately, the Fed may hold all the cards. A hawkish announcement tomorrow could see the dollar come back into favour and those lows tested strongly. No mention of potential hikes next year and we could see the upper end of the channel being tested again.
by OANDA
1
USD Quickly Lost Ground To Major Trading PartnersAs of writing, the DXY is trading at 93.355, down by 0.50% on Thursday trading. GDP growth in the US may be contributing to this 4-week low in the dollar index. GDP growth missed expectations for Q3 2021, reporting in at 2.0% rather than the expected 2.7%. Q3’s GDP growth represents the lowest value reported for this data point since the US began to recover from the worst of the pandemic. Supply constraints have been pointed out as one of the major causes for the GDP growth miss, as reported by Fannie Mae earlier in the month. Fannie Mae expects the constraints to continue for another 12 months, although weakening in intensity as time passes. USD suffers greatest loss against the EUR The USD has lost the most ground against the EUR in the past 24 hours. EURUSD is trading at 1.16831 at the time of writing, up by 0.72% and a one month high for the pair. The cause of the EUR's strength: The public address by the Christine Lagarde, head of the European Central Bank (ECB), playing down any fears of inflation. While Inflation in the Eurozone is at a 13-year high (3.4%), Lagarde and her ECB associates are not ready to drop the notion that inflation is transitory. The ECB want to see inflation above 2% over the medium term before considering rate hikes or taking a more hawkish tone. The ECB believes that inflation in the Eurozone has been driven chiefly by supply bottlenecks and energy prices. It could be some time before investors see any change in the dovish stance of the ECB. Supply constraints are expected to last for a great deal of time, as noted above, while energy prices are yet to show any sign of abatement. The Biden administration has asked energy producers to lift production to help drop the cost of energy. But the request is falling on deaf ears. At the time of writing, WTI is trading at US $83.04 per barrel, while Brent is trading at US $84.39 per barrel. Both Oil instruments are trading at multi-year highs. The price of Natural Gas does swing widely day-to-day. A 7% swing either way over a day’s trading is not uncommon. Yet, Natural Gas is still trading at US $5.732/MMBtu, more than double the price at the beginning of 2021.
TVC:DXY
by BlackBull_Markets
Today’s Notable Sentiment ShiftsEUR – The single currency strengthened on Thursday after the ECB’s October meeting failed to push back against rising expectations for the central bank to begin tightening policy in 2022. Reuters noted that ECB President Lagarde’s comments in the central bank’s press conference were not forceful in reaffirming the ECB’s dovish stance. Hence, the lack of dovish rhetoric and ongoing concerns over rising inflation was enough to keep bets for rate hikes in 2022 on the table, supporting EUR.
by thunderpips
1
Tidying Up...Flows into USD continue with yields unlocking potential for flattening. The latest breakdown in euro is calling for a reassessment across all charts, did not expect the pullback to come this far, so we will go through the process over the coming sessions. An interesting environment, we are in the middle of summer with thin liquidity and technical discipline needed. ↳ Eyeballing 1.162x for strong support, Nov-20 lows should be enough to lean on. ↳ Looking at the macro charts below, the price action is supportive and we should see 1.161/1.162 comfortable hold a breach below the 1.15 barrier will imply the LT base is not yet complete and unlock a test of parity (not expected). ↳ Inflation can provide the momentum above 1.185x (30th July highs) and indicate we are already on track for the 1.21 and 1.25 initial targets in this next wave.
Editors' picks
Long
by ridethepig
38
EURUSD Short-lived pop will fall - ECB Mesure are still on HoldHello Traders Here is a new SELL Scenario, a short lived pop, ECB Mesure are still on hold, Taper discussion in November will influence USD soon. For a longer term, it can reach 1.15 and 1.14 for a quarter if you are patient. 💹EUR/USD SELL STOP ✅ Entry @1.17000 or below (17300 is the best but not sure it will reach this point) ✅TP-1# 1.16800 ✅TP-2# 1.16600 ✅TP-3# 1.1630 ✅SL# 1.17800 JamdeJam will not accept any liability for loss or damage as a result of reliance on the information contained within this channel including data, quotes, charts and buy/sell signals
Short
by jamdejam
1
#EURGBP Upside + Fundamental driversHello Traders! Early rate hike priced in for the pound, that may not come as soon as expected. So we can see an overstretched position also if we see more vix upside along risk off sentiment that supports the trade as well. Euro (EUR) Fundamental Bias: Weak Bearish Primary Driver: 1. The Monetary Policy outlook for the ECB Rationale: The ECB provided an overall balanced policy decision at their September meeting. They chose to slow the pace of asset purchases, explaining that the current levels of financial conditions allow them to buy assets under PEPP at 'moderately' slower pace compared to the pace of purchases seen in Q" and Q+. However, as expected, the bank made it vers clear that the move was not tapering it was merely a recalibration of purchases (when you plan to perform less QE that's technically tapering but who's counting).The bank raised their inflation projections for 2021, 2022 and 2023, and even though the 2021 projections were arquablynot as high as the markets were hoping for, the more important me-term projections still showed inflation moving to well below the banks 2% target to affirm the transitory view of recent price measures. All in all, the decision was broadly balanced and as a result failed to inspire any meaningful reaction in European assets. For this weeks upcoming meeting, the markets are not expecting any fresh changes as all eyes are on the December meeting. Primary driver: 2. The country's economic developments Rationale: Earlier issues with vaccinations and lockdowns at the start of 2021 weighted on eu growth prospects, with growth differentials against the US an UK still quite wide, despite some of the recent some of the recent strong economic data. Despite the hit to growth, the recent activity data suggests the hit to the economy from recent lockdowns weren't as bad as feared. That alone isn't enough to change the current bearish outlook. Another factor to watch is the discussions among European states to allow the purchase of green bonds not to count against budget deficits. Such a decision could change the fiscal picture drastically and we would expect that to be a big positive for the EUR and European equities. However, in the short-term, EUR traders will be firmly fixing their eyes on the ECB, which is expected to be a bit of an uneventful meeting. Primary driver: 3. Funding Characteristics Rationale: An interesting driver for the euro is its funding characteristic exhibited during risk off sentiment. AS a low yielder ( like jpy and CHF ), the European has been an interesting choice among the carry trades, especially during 2019 it was favoured against high yield EM currencies, and part of the big upside in the euro during the initial risk off scare in march 2020 was attributed to an unwind of large carry trades. recently we've seen the euro exhibit some resilience during jittery risk tones despite usd strength. As more central banks start normalising policy, the euro's attractiveness as a funding current ycould keep it pressure din the med term vs higher yielders. However, it could spark risk off upside if some of those trades unwind. That doesn't make our a safe haven, but as rates climb globally it can become more sensitive to risk. Primary driver: 4. CFTC Analysis Rationale: Latest CFTC data showed a positioning change of +6291 with a net non-commercial position of -12107. The stretched positioning for large speculators we noted the past few weeks have continued to ease, but net shorts are sizable for leveraged funds. Thus, we would not be interested in chasing the euro lower from here without seeing a more mean reversion first. Great British Pound (GBP) Fundamental Bias: Bullish Primary driver: 1. Monetary policy outlook for the BOE Rationale: The SEP policy meeting from the BoE saw money markets rushing to price in a much faster and more aggressive policy path than previously expected. Even though this course falls in line with our bullish bias for the pound, we do think the market is a bit too aggressive too quick right now. The bank did explain that they now see inflation above 4% by Q4 of this year, and the possibility of more sticky inflation was the key reasons why we saw a 7-2 QE vote split with Saunders and Ramsden both dissenting to cut purchases. However its important to note that the remaining 7 members still see inflation as transitory, and the fact that this expect CPI above 4% means any prints that don't come close to that poses downside risks. Furthermore, even though the bank said their expectations of modest tightening has strengthened. the admitted that lots of uncertainties remain.A big one of these is the labour market, where even though the number of furloughed staff have decreased, that decrease has materially slowed from august which poses more uncertainty for the labour market. Thus, even though our bias remains unchanged, and we see the bank lifting rates Q', we do think the over optimistic moves in the money markets poses sort term headwinds. Primary driver: 2. The country's economic developments Rationale: The successful vaccination program that allowed the UK to open faster and sooner than peers provided a favourable environment for sterling and the strength of the economic recovery has meant solid growth differentials favouring GBP. However, a lot of these positives are arguably the same outperformance we saw earlier. With out above comments about money markets, it also means that there is now more risk to the downside surprises then was the case a few months ago. Primary Driver: 3. Political developments Rationale: Even though a Brexit deal was reached last year, some issues like the Northern Ireland protocol remains, and with neither side willing to budge it seems like these issues. On Friday, the EU ramped up some political posturing with report that said they are mulling róterminating the BREXIT deal if the UK triggers Article 16. For now, these are just threads, but with rates markets still very aggressively priced any further escalation could increase the odds of seeing repricing downside in the GBP, so one to keep on the radar after Friday. Primary Driver: 4. CFTC Analysis Rationale latest CFTC data showed a positioning change of +13594 with a net non commercial position of + 1615. Sterling have been a very impressive rebound from recent lows as market s reacted positively to recent BOE comments which sparked additional downside in SONIA futures, which are now fully priced for 15-basis point hike in Q! and about three 25-basis point hikes by end 2022. Even though GBP has enjoyed upside on the tightening expectations, the reasons why markets are pricing ia steeper rate path is out of fear of inflation and not due to a more positive economic outlook, which as we highlighted above does pose headwind for the Pound in the weeks ahead if growth of inflation data surprise lower in the weeks ahead. Have a great week! Vitez
Long
by Vitezabraham
4
$EURCHF: Bottomed here...I think we have a decent trade with something between 3:1 and 5.28:1 RR here. I'm long here since the hourly is bottoming, and daily charts hit long term support, while being close to exhausting the last daily down trend signal that was active. Technically, this is a very strong mean reversion possibility and we have the backing of the Swiss National Bank which could stop the decline intervening in the market around here... Best of luck, Cheers. Ivan.
Long
by IvanLabrie
2