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Eurusdidea

EurUsd can drop to 0.85-0.90 zone (long term outlook)Even I, who have been trading for 20y I'm used to a stronger Eur than Usd, so this outlook may seem fantastic, but in my opinion, both fundamentals and technicals are sustaining a drop under parity for EurUsd. Looking at the monthly posted chart we can clearly see that since the 2008 crisis, EurUsd is in a downtrend and the only deviation from this trend was the 2020 break of the trend line that stopped in horizontal support and proved to be a false one in the end with the pair getting back under. Indeed, at this moment, EurUsd is trading in a very strong technical support, but if we look closer at price evolution we can see that every little rally is sold (see yesterday's attempt of correction). That being said, in the long run, I expect a drop under parity, and a 0.85 price is really not out of the question, on the contrary, is very probable at this moment.
Short
by Mihai_Iacob
12
EURUSDThe euro initially gapped higher to kick off the Monday session but has given back all of the gains to slam into the 1.05 level again. The 1.05 level is an area that should continue to attract a lot of attention because it is a large, round, psychologically significant figure, and the fact that it is an area where we have seen support and resistance in the past. At this point, the euro is struggling due to a massive amount of problems in the European Union. The first thing would be that we could be looking at a serious lack of energy. That would destroy the European economy, and that could cause a significant amount of downward pressure on growth. The size of the candlestick is not necessarily crucial or impressive, but it does suggest that we still have quite a bit of negative pressure. Ultimately, I think that rallies will continue to be sold into as there seems to be no real hope of that situation sorting itself out. The market rallying will offer a nice opportunity to pick up “cheap US dollars” at the first signs of exhaustion in this market. Ultimately, the market is in a very negative downtrend, and I do not think that is going to change anytime soon. That being said, you should keep in mind that the area below is going to be difficult to chew through, but as long as the Federal Reserve continues to be hawkish, it is difficult to bet against the US dollar. Furthermore, we have a Federal Reserve meeting coming out that people will be looking for a 50 bps rate hike at the least, and some are even starting to price in 75 bps. If the statement suggests that they are “on autopilot” to add 50 bps every meeting, that is going to continue to drive money into the greenback. Economic numbers out of the European Union are very weak at the moment, and they do not look like they are improving. With all of that being said and the complete lack of risk appetite out there, I just do not see how this pair will change anything anytime soon. I like the idea of fading rallies as it gives a bit of value to what is the strongest currency right now.
Short
by SmoothJB
EurUsd- Can correct to 1.0750-1.08 zoneOne thing is clear, EurUsd is in a strong downtrend. However, as I said in my previous analysis, the pair is now in a very strong support zone and a correction is probable. Looking at the posted hourly chart we can see that EurUsd has formed a base in this zone and we can have a corrective leg up. Resistance is in the 1.0750-1.08 zone and in this zone, short-term traders can close their long positions. A new low would negate this scenario
Long
by Mihai_Iacob
5
EURUSDThe Euro has had a very rough month of April, and the way we are closing out the month suggests that we may have further negativity ahead. It is worth noting that we have tested the 1.05 level, an area that is a large, round, psychologically significant figure. This area could offer a little bit of profit-taking and a short-term bounce. However, that bounce should end up being a nice selling opportunity and I think that will be the theme of the month of May for the Euro. The 1.08 level is an area that has been important on the way down as well as previous resistance. All things being equal, the market continues to see a lot of negativity out there, as the interest rate differential between the European Union and the United States has caused a lot of downward pressure. The US dollar is also a place that people run to when they are looking to find a bit of safety. As long as that is going to be the case, and it certainly looks as if there are plenty of reasons for that to be, I do believe that this pair will continue to find plenty of sellers. However, this does not necessarily mean that we fall straight down to the bottom. Short-term rallies will occur, perhaps lasting a couple of days. At the first signs of exhaustion, I am more than willing to start shorting this market, because quite frankly the trend is so strong, and it is also worth noting that Europe has a major issue in the form of a lack of energy. They are stuck in a situation where they will have to do something about Russian natural gas, and a lack of natural gas is disastrous for the outlook of the European economy. The 1.08 level above is significant resistance. If we were to overtake that area to the upside, then we might have the opportunity to go to the 1.10 level. However, I do not necessarily think that is as likely as giving up gains much sooner than that, and I will be shorting at the first signs of exhaustion on every rally. I do not think that the Euro is going to reverse the trend anytime soon, so I certainly have a downward bias when it comes to this market.
by SmoothJB
2
EURUSDThe downward trend of the EUR/USD currency pair is continuing. This path pushed the most popular currency pair in the forex market to the 1.0514 support level, the lowest in five years, and settled around the 1.0555 level at the time of writing the analysis. The decline continued amid investor concerns about growth and threats to energy supplies from Russia. The single European currency, the euro, tumbled past the lowest level it reached in the first weeks of the coronavirus pandemic in March 2020, after Russia said it would cut gas to Poland and Bulgaria. There is now a possibility that the euro will close in April without its 20-year bullish trend, which could put parity with the dollar on the horizon. In contrast, gains in the dollar accelerated and Russia's arming of energy exports add to headwinds for the European currency, including the European Central Bank's relatively more cautious stance on monetary tightening than the US Federal Reserve. Traders, who requested anonymity because they are not authorized to comment on the forex foreign exchange market publicly, said that the currency's decline since the New York close saw significant momentum in sell orders below the target low. The European Union has rejected its demands to pay for Russian gas in rubles, but deadlines are now running out and governments need to decide whether to accept Russian President Vladimir Putin's terms or lose vital supplies. Concerns about global growth caused by the worsening virus outbreak in China also boosted the dollar at the expense of the single European currency. On the future performance of the euro-dollar: Some analysts are of the opinion that a depreciation of the euro-dollar exchange rate could move it close to it, or achieve 1:1. The Eurozone energy shock intensified in the last hours after news emerged that Russia would suspend gas supplies to Poland and Bulgaria. The reason Russia cited was the two countries' failure to comply with their demand to pay for gas in rubles. For its part, Poland says it was prepared for this possibility, but indicates that Russia is increasingly ready to arm its energy exports. According to the performance, the exchange rate of the euro against the dollar fell from its highest levels near 1.15 before the outbreak of the war in February to 1.0515 today, as analysts say that the war poses significant threats to the growth of the euro area and the European Union. Jeremy Bolton, market analyst at Reuters, says the chance of EUR/USD falling below parity is greater now than it was during the eurozone debt crisis in the early 2000s. Bolton added, “Demand for the dollar resulting from significant tightening in US monetary policy is likely to lead to a larger decline than in 2015 when bets on the end of the single European currency drove traders into a record sell-off and the pair fell to 1.0457.” The analyst notes that the current betting shows traders are “gambling high” — confirming the view that the parity decline is not crowded. And when sites get crowded, it's actually a headwind for movement, but when the market is relatively uncrowded, the "clear air" ahead of you allows the trend to extend. “In 2015, the policies of the European Central Bank were designed to save the euro. The current policies are weighing on them and there is the potential for a bigger disagreement with the Fed, not only to raise interest rates in a big way but also to reduce the balance sheet. This could push the EUR/USD pair much lower.” According to the technical analysis of the pair: So far, the general trend of the EUR/USD currency pair is still bearish. As mentioned before, the continuation of the weakness factors supports the current trend, the most prominent of which is the continuation of the Russian war and its repercussions. It is also in addition to the position of central banks towards tightening their policy, and the US Federal Reserve is leading this. Forex traders do not care about technical indicators reaching oversold levels and the persistence of weakness factors that open the way for a level test. The bearish trend is stronger and the closest to it is currently 1.0500 and 1.0380, respectively. On the upside, and according to the performance on the daily chart, the EUR/USD pair needs to break the psychological resistance currently 1.1000. Otherwise, the trend will remain bearish, and I still prefer to sell the EUR/USD from every ascending level. The euro-dollar pair is awaiting the announcement of German inflation figures, then US economic growth figures and weekly jobless claims.
by SmoothJB
EURUSDThe euro fell rather hard on Wednesday to reach the 1.05 area. This is an area where we have seen a lot of action in previously, and it is a large, round, psychologically significant figure. The 1.05 level would cause a lot of headline noise, and we have bounced well over 60 pips from that area. Because of this, I think it is probably only a matter of time before we have to bounce after this massive selloff. This being said, I do not want to buy the euro. In fact, I think that any significant rally you see at this point should end up being a nice opportunity to short this market yet again. The 1.08 level above should act as a bit of a ceiling in the market, and then we have the 50-day EMA which is rapidly approaching the 1.0933 level, an area where we had seen previous resistance as well. Whether or not we can break down below the 1.05 level is a completely different question, but it certainly would not be surprising at this point. A rally at this juncture will more than likely continue to attract sellers given enough time due to the fact that the overall momentum of the market has been so negative. The Federal Reserve continues to be very hawkish with its statements, and as a result, the market will have to deal with the idea of higher interest rates in the United States. On the other side of the Atlantic Ocean, we have the European Central Bank which is stuck in a situation where they cannot raise interest rates very rapidly because although there is inflation and there are energy concerns. An economy that does not have energy is not an economy that is going to grow very much. Currently, I believe this pair is oversold and a bounce is almost certain. The bounce should be a nice opportunity so I am going to step out of the way and perhaps try to pick up “cheap dollars” at higher levels. Expect choppy volatility, but that has been the way this pair has traded for several months now anyway, so it should not be a huge surprise at this point. The fact that we bounced as hard as we did does suggest that we are ready to turn around for the short term.
by SmoothJB