Factors to Consider When Trading the EUR/USD Pair this Week
The EUR/USD Pair is Looking Decidedly Bearish on Multiple Fronts
On Friday, 1 July 2016, the EUR/USD currency pair rose slightly to 1.1169. However, there is upside risk for trading this currency pair and it remains in the level between 1.0971 and the current level. The resistance level at 1.1190 remains intact, but analysts base the upside potential to the following level 1.1230-1.1235.
A retreat in the currency pair is likely beneath the 1.1270 level. If we look at the Ichimoku Cloud (presently at 1.1090-1.1092) this currency pair will be tested in the region of 1.1070-1.1075. If it moves further to the downside, we are likely to see a fall as low as 1.1024. Further weakness could drop the currency pair as low as 1.0971. Over the short-term, the outlook remains mixed, and traders have adopted a risk-off approach to this currency pair.
The EUR/USD Currency Pair Technical Indicators
At its current trading level of 1.1155, the EUR/USD currency pair has generated sell signals among traders. According to general consensus, there is a sell recommendation based on moving averages and a sell recommendation based on technical indicators. The following levels for Classic patterns are indicated:
- S3 at 1.1112, S2 at 1.1119 and S1 at 1.1124
- R1 at 1.1131, R2 at 1.1143 and R3 at 1.1148
- The Pivot Point is found at 1.1131
For Fibonacci, the support, resistance and pivot point levels of the following:
- S3 at 1.1119, S2 at 1.1124 and S1 at 1.1126
- R1 at 1.1136, R2 at 1.1138 and R3 at 1.1143
- The Pivot Point is found at 1.1131
The technical indicators offer a mix of buy, sell and neutral signals for the EUR/USD currency pair. RSI offers a neutral action, STOCH (9, 6) offers a sell option and MACD is a sell. In terms of moving averages, some interesting trends can be seen as we move from shorter moving averages to long-term moving averages. Overall though, the summary for moving averages is a sell. MA 5 offers a simple moving average of 1.1130 and a buy with an exponential moving average of 1.1125 and a buy. The MA 10 offers a simple moving average of 1.1129 and a buy and an exponential moving average of 1.1143 and a buy.
MA 20 offers a simple moving average of 1.1199 and a sell and an exponential moving average of 1.1174 and a sell. The MA 50 moving average offers a simple moving average of 1.1240 and a sell and an exponential moving average of 1.1222 and a sell. The MA 100 moving average has a simple moving average of 1.1256 and a sell, and an exponential moving average of 1.1204 and a sell.
The Sentix Investor Confidence Index Report
The recently released Sentix Investor Confidence Report (SICR) indicates that economic stagnation is a real possibility in the Eurozone now that Britain has voted in favour of a Brexit. The confidence index dropped to 1.7 from 9.9 in the process. It is likely that the ECB (European Central Bank) will formulate QE policies to boost the Eurozone economy in the wake of the shock referendum result. Currency traders and speculators are also concerned that the vote will embolden other European countries to break from the Eurozone as well. For example, Greece may decide to pursue its Grexit objectives, and in the UK itself Scotland may push for an independence referendum once again.
Is also abundantly clear that the strife in Europe is affecting the policies of the Federal Reserve Bank. That Janet Yellen and the FOMC decided against raising interest rates from the current level of 0.25%-0.50% to the anticipated 0.75% level is telling. The economic fallout from a Brexit remains unknown, and this means that the EUR/USD currency pair is also skating on thin ice. Data will only be available towards the end of July, midway through August in the form of retail sales updates, PMI manufacturing data and GDP figures for the UK and Europe. Presently, the speculative sentiment index indicates that 42.9% of traders are going long on this currency pair, and that is a perhaps a bullish signal for the EUR.
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About Brett Chatz
Brett Chatz is a graduate of the University of South Africa, and holds a Bachelor of Commerce degree, with Economics and Strategic management as his major subjects. Nowadays Brett contributes from his vast expertise in online trading for iForexTrader.co.uk.