Is Euro?s Recent Bounce Sustainable?
Today’s Spotlight Market
Euro currency futures saw little reaction to the release of the Fed minutes on Wednesday as nothing in the notes signaled any change to traders? expectations that the Fed will hold-off on hiking the Fed Funds rate until sometime in the 4th quarter of this year.
Fundamentals
The recent talk about the Euro reaching parity with the U.S. Dollar has been muted somewhat, especially following the nearly 1000 pip correction we have seen the past several weeks. Those traders looking at the long-term trend for the Euro vs. the Dollar may find it difficult to become overly bullish on the Euro?s prospects. Since making all-time highs back in 2008, the Euro has made a series of lower highs and lower lows as an economic malaise has engulfed Europe since the financial crisis began. Now, with the European Central Bank embracing a very accommodative monetary policy, including the purchase of European sovereign bonds, the supply of Euros will increase, which could help to cap any rally attempts, especially those caused by weak bears covering short positions on technical corrections versus the long-term trend.
Technical Notes? -? View Today’s Chart
This morning we will look at the weekly continuation chart for Euro FX futures, we notice the series of lower highs and lower lows in the Euro starting at the all-time highs made back in 2008. While the Euro is currently in a ?correction? phase from the recent lows made in March, we would still need to see a rally above 1.2000 to really begin to question the sustainability of the current downward price trend. Prices are once again hovering near the 20-week moving average after a brief stint above this widely watched indicator. The 14-week RSI has started to turn downward with a current reading of 43.10. 1.1539 is seen as the next resistance level for the front-month Euro, with support seen at 1.0529.
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