31 Jan 2014
Flash: EUR/USD: heading down, down, down - FXStreet
FXstreet.com (Barcelona) - Valeria Bednarik, FXStreet Chief Analyst notes that the FED not only took down another $10B from its facility programs, but also announced the policy will repeat in February, giving continuity to Bernanke’s plan through upcoming chairman Yellen.
Key Quotes
“In the meantime, European data disappointed big, with inflation readings in Germany and the EU falling well below expect. The data may be enough to force Draghi’s hand next week, when the ECB meets for another monthly economic meeting. Rumors already point for a rate cut both in repo and deposits rate, which may sound like a desperate measure for markets, and do no good to the common currency. But maybe that’s what policy makers will like, a cheaper EUR to accelerate the recovery. Who knows?”
“In the meantime, US data resulted mild positive along the week, shrugging of the negative sentiment surged by latest disappointment in employment figures. Next week, will also provide more clearly on the sector situation, as January employment data will be released on Friday. And to add more, investors pulled out money of emerging markets’ investments this week, so far estimated in above$12B for January, which lead to strong currencies devaluations all over the world, while major indexes followed as market players stand on risk aversion mode.”
“In this scenario, the EUR/USD daily chart presents a strong bearish momentum, with price accelerating to fresh 2-month low below the 1.3500 level, indicators heading south in negative territory, and price below a bearish 20 SMA, now offering strong resistance in the 1.3610 area. The wider picture is as of the bearish trend is just about to start, considering the failure at 1.3900, the long term descendant trend line coming from the record high of 1.6038, albeit there’s still one strong support to breach to confirm the downward continuation: the 1.3400/40 price zone.”
“Once below,there’s little in the middle towards 1.3280 area, while once below this last, the trend may extend down to 1.3000 before this quarter comes to an end.
Steady gains above aforementioned resistance of 1.3610, may see the pair attempting an upward corrective movement towards the 1.3700 figure, where sellers will rather add than revert their view.”
Key Quotes
“In the meantime, European data disappointed big, with inflation readings in Germany and the EU falling well below expect. The data may be enough to force Draghi’s hand next week, when the ECB meets for another monthly economic meeting. Rumors already point for a rate cut both in repo and deposits rate, which may sound like a desperate measure for markets, and do no good to the common currency. But maybe that’s what policy makers will like, a cheaper EUR to accelerate the recovery. Who knows?”
“In the meantime, US data resulted mild positive along the week, shrugging of the negative sentiment surged by latest disappointment in employment figures. Next week, will also provide more clearly on the sector situation, as January employment data will be released on Friday. And to add more, investors pulled out money of emerging markets’ investments this week, so far estimated in above$12B for January, which lead to strong currencies devaluations all over the world, while major indexes followed as market players stand on risk aversion mode.”
“In this scenario, the EUR/USD daily chart presents a strong bearish momentum, with price accelerating to fresh 2-month low below the 1.3500 level, indicators heading south in negative territory, and price below a bearish 20 SMA, now offering strong resistance in the 1.3610 area. The wider picture is as of the bearish trend is just about to start, considering the failure at 1.3900, the long term descendant trend line coming from the record high of 1.6038, albeit there’s still one strong support to breach to confirm the downward continuation: the 1.3400/40 price zone.”
“Once below,there’s little in the middle towards 1.3280 area, while once below this last, the trend may extend down to 1.3000 before this quarter comes to an end.
Steady gains above aforementioned resistance of 1.3610, may see the pair attempting an upward corrective movement towards the 1.3700 figure, where sellers will rather add than revert their view.”