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Alpari.com EUR/USD January 2018

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  #1  
Old 14-01-2018, 03:41
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Default Alpari.com EUR/USD January 2018

On Wednesday the 10th of January, the euro jumped after a report from Bloomberg that China was preparing to either reduce or stop its purchases of US government bonds. The Chinese regulator, however, dismissed these rumours.

On Thursday the 11th of January, the euro jumped again after the minutes of the ECBís latest meeting on monetary policy were disclosed. This sent Eurobonds up, along with the euro crosses and our main EURUSD pair. The European regulator remarked that the economic situation is improving, so itís possible that the bank could revise its monetary policy in the early stages of this year.

The sharp rise of the single currency and weak US inflation data put the dollar under pressure. The producer price index for December dropped by 0.1% against a forecast of +0.2%, and a previous reading of +0.4% (a negative factor for the US Fed).

On Thursday, trading on the euro closed up above 1.20. Now weíll look at the hourly chart and construct some intraday models for the past 3 days.

The only way to protect yourself from unexpected news items is through stop levels. Since the minutes of the ECB meeting were published, the euro has recovered to 1.2066, with this recovery extending into the Asian session. Growth stopped at around the 112th degree. The area between the 112th and 135th degrees is a reversal zone, so the euro could drop to the LB balance line without hindrance during the European session.

Since yesterdayís upwards movement hasnít been erased, like it was on Wednesday, I think a triple top could form today. Iíve gone for a triple top because in Asia, all the euro crosses are trading up. Iím sure that on these rising crosses, buyers will try to reach new highs. So, once a new high is reached, if thereís a double bearish divergence between the AO indicator and the price, we can start looking downwards.

The target is 1.2075, with a closing price in the region of 1.2042. If the crosses reverse, the target will be 1.1984. If the crosses are falling, the 45th degree wonít stop sellers.
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Old 15-01-2018, 15:57
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Default Re: Alpari.com EUR/USD January 2018

The fundamentals have pushed the euro into overbought territory. This zone is located between the U3 and U4 lines. The U3 MA line diverges from the LB (sma 55) by 1%, while the U4 line diverges by 1.62%. The price is in this zone very rarely, and never for long.

Given the national holiday in the US today and the lack of economic events in Europe, my forecast for today is looking downwards. If Fridayís movements are in one direction, I predict Mondayís movements to go against Fridayís, without giving any consideration to the news.

In Asia, buyers have shifted the maximum to 1.2240. Having exited the wave structure, itís time for a correction on the euro. The 45th and 67th degrees have been shifted to 1.2185 and 1.2157 respectively.

Iím well aware that as long as there are a lot of willing buyers for the dollar, the major players will be trying to push the euro up in order to change sellersí minds and induce a reversal. When they start to believe that the euro is on the rise and start reversing their positions, the major players will abandon the euro to induce another reversal on our pair. 84% of open positions on the EURUSD pair at the moment are short.

On the current hour, the trend line runs through 1.2157. If we project this line into the future, then in the case of a decline, the price should meet this line at 1.2187 at 15:00 (GMT+3). Iím planning to take profit on the correction to the LB line.
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Old 22-01-2018, 16:53
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Default Re: Alpari.com EUR/USD January 2018

On Friday the 19th of January, despite a price surge to 1.2296, trading on the euro/dollar pair closed down. The euro dropped against the dollar to 1.2214 before trading closed in Chicago. The euroís decline was brought about by a rise in US bond yields as well as market participants awaiting the results of an SPD vote in Bonn on whether or not to enter formal coalition talks with Angela Merkelís party.

US 10Y bond yields have risen from 2.61% to 2.66% (high from 2014).

The greenback received also some support from the President of the San Francisco Federal Reserve, John Williams, who said that the Fed would continue on its path of gradual rate hikes in 2018 and is looking at about 3 rate hikes for the year.

Despite the fact that the price deviated from projections at the beginning of the European session, the price hit its target during the US session.

On Monday, trading on the euro opened with an upwards gap after the US government shutdown on Saturday and the agreement to hold coalition talks over the weekend in Germany. Trading on the euro opened at 1.2270. Now, sellers have closed this gap completely and the euro is trading at 1.2226.

The US government has temporarily shut down. The White House has blamed the Democrats for this due to them having blocked federal funding.

The US economy, however, doesnít directly depend on the government. Traders have adapted to this turn of events and so there isnít expected to be long-term fallout from this.

What will affect markets is not the fact of a government shutdown, but its duration. The last government shutdown lasted for 16 days, running from the 1st to the 17th of October, 2013.

Top representatives from both the Republican and Democratic parties held talks on Sunday. The US Senate is to vote on the extension of government funding at 06:00 GMT.

At their party conference in Bonn, the Social Democratic Party (SPD) voted for official coalition talks with Angela Merkelís Christian Democratic Union (CDU). This is expected to result in the formation of a new coalition government with Angela Merkel at the helm.

So, what can we expect from the euro today?

After a decline in the Asian session from 1.2272 to 1.2216, a correction is on the cards, with quotes expected to rise to 1.2255. My forecast has the euro dropping from 1.2236/40. My forecast is for the next 2 days. If the DTR1 line holds its ground, we can expect the euro to open at around 1.2162 on Tuesday. For now, sellers need to break through the 1.2210 Ė 1.2215 range.
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Old 27-01-2018, 01:06
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Default Re: Alpari.com EUR/USD January 2018

After hitting a new high in the European session, the euro entered a sideways trend leading up to Mario Draghi’s press conference. There wasn’t much of a reaction to the initial decision. The ECB meeting on monetary policy concluded with decisions to maintain the refinancing rate at 0.0% and the deposit rate at -0.4%.

The QE program is being maintained until September at a volume of 30bn EUR a month. This could be extended should the need arise. Interest rates are expected to remain at their current level for the long term. Should the economic conditions in the Eurozone get worse, the scale of the program could be increased.

Mario Draghi noted that the Eurozone’s economy is growing faster than expected. Volatility on the single currency is a current source of uncertainty and so stimulus programs need to be maintained in order to keep inflation up. Inflation over the next few months is set to remain around its current level.

The euro/dollar pair jumped on Draghi’s comments as the Eurozone’s economy grows along with the euro. Euro bulls received some additional support from Thomas Jordan, the chairman of the Swiss National Bank, after he told reporters that the SNB was ready to intervene in the Forex market if needed. This would be on the EURCHF pair to weaken the national currency.

Donald Trump halted the dollar’s slide during the US session. In an interview with CNBC, he said that traders had misinterpreted Steve Mnuchin and taken his comments about a weak dollar out of context. The euro then dropped by nearly 200 pips from 1.2537 to 1.2364 (-173 pips).

I have no desire to analyse markets when they react so strongly to verbal interventions because at times like these, the major players rely on crowd psychology to guide their trading. Also, we don’t know what other statements we could get from officials. It was enough just for Trump to say that Mnuchin’s comments were misinterpreted for the euro to slump by nearly 200 pips.

The price has returned from the zone between U3 and U4 to the LB balance line (sma 55). This marks a drop of 135 pips, and now the euro is trading at 1.2450. Given that the euro has dropped below 1.2389, there’s a chance of it correcting even lower on the daily pin bar with a long upper shadow. Moreover, the target of 1.2533 has been reached on the monthly timeframe.

My forecast has the euro recovering to 1.2475/80. If it stays with the trend, the price could rise as far as 1.2503, so don’t be in too much of a hurry to short the euro if that’s what you’re planning to do. Once a certain level is reached, you need to look at trader sentiment towards US bonds and euro crosses.
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