Inside the Currency Market: EUR/USD

Two points vital to EUR/USD above that will expand and contract as the week rolls along and dictate the week’s prices, 1.1421 and 1.1482. The current range is found between 1.1334 – 1.1552. In the shortest term, 1.1369 and 1.1334 must break lower to see lower prices while 1.1394 must break higher yet the current bottom is located at exactly 1.1307. The points responsible for last week’s liftoff was found shortest term at 1.1017 and 1.0910. Longer term liftoff points occurred at 1.0751 and 1.0683. To offer context to 1.1552 range top, current targets exist at 1.1415 and 1.1524 as well as a range break at 1.1508. Why prices rose Friday afternoon was the system remained unchanged from Friday morning so both the ECB and the Fed allowed EUR to rise 23 pips further from 1.1365 to 1.1388. Fed Funds still holds at 0.15 and closed at 0.15 in 7 of the last 8 trading sessions. The message in my estimation is the market hasn’t backed off from a Rate hike, its only a question of when and not if. So the present EUR rise should be viewed as a corrective rally. Economically, USD sees PMI’s and Consumer Confidence Tuesday and GDP and PCE Thursday, the most important is the GDP and PCE determinations. GDP as a release is way oversold as the 1 and 5 year averages are found at 2.19 and 2.00 while the 10 year average is found at 2.47. GDP 1.9 is expected, last was 2.00.

EUR/USD. Range 1.1369 – 1.1394. Above 1.1394, targets 1.1415, below 1.1369 targets 1.1336, 1.1334 then bottom 1.1307.

Bottom. 1.1307. Range break above 1.1508, Below 1.1334 and 1.1222. Overbought sell point 1.1415, 1.1442, 1.1469. Strategy. Longs not recommended due because current price is middle range as 35 pips exists to above target while 11 and 15 pips exists from sell points at 1.1369 and 1.1365.

Shorts below 1.1369 and 1.1365, target 1.1350, 1.1338, 1.1336, 1.1321 and Bottom at 1.1307. If a reversal higher will be seen at 1.1350 and 1.1338.

Next report at China open, more pairs coming. many, many thank you’s for all views and as always many thank you’s to friends at Fxstreet. My main trading system will be fully operational again by Wednesday so many more pairs to post then.

Brian Twomey, Inside the Currency Market,