EUR/USD – Failing Right at 50-day SMA

EUR/USD – Failing Right at 50-day SMA

EUR/USD – Failing Right at 50-day SMA

Yes we are talking EUR/USD 3 days in a row but that’s the trade we are in and it’s the most important pair right now. This week the ECB cut interest rates, extended its QE program and the EUR/USD rallied. Yellen warned that delaying a rate hike is a risk and NFPs were strong but the USD barely rallied. While it may be difficult to remain confident in our views that EUR/USD will drop back below 1.08, the fundamentals remain intact. Also, ECB officials were not happy with the market’s reaction. ECB member Constacio was the first to say that the markets got the ECB’s message wrong. A rising euro diminishes the effectiveness of ECB stimulus.

Technically, the short squeeze in the EUR/USD stopped right at the 50-day SMA as shown in the attached chart. There’s also a significant resistance above current levels between 1.10 and 1.1060. The 100-day and 200-day SMA should cap gains for the pair. In terms of support the main level to watch the July swing low of 1.0809. Once that’s broken it should be clear sailing to 1.07.

Chart Of The Day

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