Our thoughts on the EUR – anyone seeing different?
In the early hours of yesterday’s London segment, the EUR resumed its decline against its US counterpart, eventually closing below 1.07 and testing the 1.0646-1.0689 area, a small hidden H4 demand (seen clearer on the H1). As we write, we can see that price is retesting the underside of 1.07. Should the bulls succeed in breaking through this barrier, the H4 supply at 1.0759-1.0738 would likely be the next objective to reach. Whereas, a close below the current H4 demand could spark further selling down to the 1.06 boundary.
With the above points in mind, let’s turn over to the bigger picture. Weekly price, as you can probably see, continues to maintain a bearish stance beyond the trendline support drawn from the low 0.8231, which could, should a weekly bearish close emerge, ultimately send the EUR back down to demand at 1.0333-1.0502. On top of this, the daily candles recently closed below a major support level at 1.0710. This might, given that the last time this level was visited it produced a 900-pip move, portend further downside to a Quasimodo support level coming in at 1.0557 (positioned just above the aforementioned weekly demand).
Our suggestions: According to the CME group Fed watch tool there’s a 90% chance that the FOMC will hike rates in December. This – coupled with the bearish posture reflected on the higher timeframes, our team feels lower prices may be on the cards. Unfortunately, selling into a H4 demand is not something our team would feel comfortable with. Moreover, there’s little more than 40 pips room to play with beyond the current H4 demand till we reach 1.06! Therefore, opting to stand on the sidelines here may very well be the best path to take.
Data points to consider: US Housing data, US Inflation data, Philly Fed business outlook survey, US Jobless claims and US Housing starts all at 1.30pm. FOMC member Dudley speaks at 1.50pm, Fed Chair Janet Yellen testifies at 3pm as well as FOMC member Brainard speaks at 5.30pm GMT.
With the above points in mind, let’s turn over to the bigger picture. Weekly price, as you can probably see, continues to maintain a bearish stance beyond the trendline support drawn from the low 0.8231, which could, should a weekly bearish close emerge, ultimately send the EUR back down to demand at 1.0333-1.0502. On top of this, the daily candles recently closed below a major support level at 1.0710. This might, given that the last time this level was visited it produced a 900-pip move, portend further downside to a Quasimodo support level coming in at 1.0557 (positioned just above the aforementioned weekly demand).
Our suggestions: According to the CME group Fed watch tool there’s a 90% chance that the FOMC will hike rates in December. This – coupled with the bearish posture reflected on the higher timeframes, our team feels lower prices may be on the cards. Unfortunately, selling into a H4 demand is not something our team would feel comfortable with. Moreover, there’s little more than 40 pips room to play with beyond the current H4 demand till we reach 1.06! Therefore, opting to stand on the sidelines here may very well be the best path to take.
Data points to consider: US Housing data, US Inflation data, Philly Fed business outlook survey, US Jobless claims and US Housing starts all at 1.30pm. FOMC member Dudley speaks at 1.50pm, Fed Chair Janet Yellen testifies at 3pm as well as FOMC member Brainard speaks at 5.30pm GMT.
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