The EUR/USD has seen see-saw price action as the greenback has fallen in and out of favor, leaving the pair little unchanged on the day. We expect to see limited conviction behind rallies with thin holiday trading. Therefore, targeting the most liquid pair is prudent as it should provide favorable spreads allowing for scalpers to maximize profits. Concerns over the European debt crisis have hit a lull which is allowing for brief support for the single currency. However, bullish potential is limited with Portugal and Spain still in the cross hairs with France now coming into focus with their budget deficit at troubling levels.
Key Technical Levels
Charts created using Strategy Trader– Prepared by John Rivera
The 200-Day SMA at 1.3086 has combined with a rising trend line to provide support and allow the pair to regain its footing. Meanwhile, the 20-Day SMA at 1.3213 and a descending trend line are limiting upside potential. The developing wedge points to further consolidation and is creating an ideal scalping environment. Former consolidation is providing short-term support and may provide target levels to enter and exit positions.
Charts created using Strategy Trader– Prepared by John Rivera
Key Support/ResistanceLevels to Watch
|
Pair |
S/R |
Level |
Spot |
Valid Since |
Market Influence |
|
USD/CAD |
Support |
Parity |
1.000 |
06/04/08 |
High |
|
EUR/GBP |
Resistance |
50-Day SMA |
0.8554 |
11/10/10 |
Medium |
|
GBP/USD |
Support |
200-Day SMA |
1.5396 |
09/14/10 |
Medium |
Quantitative Metrics
The EUR/USD’s Bollinger band width has narrowed to 427 pips as the pair continues to trade sideways during thin holiday volume. The pair’s level of variance places it in the bottom half of the major pairs, making it an attractive scalping target. A declining ATR is also enhancing the pair’s case, with daily volatility quieting to 139 pips. Despite the decline, the pair still ranks near the top of the most active pairs which should be a concerns for high frequency traders.
Charts created using Strategy Trader– Prepared by John Rivera
Volatility / Activity Indicators
|
EURUSD |
GBPUSD |
USDJPY |
USDCHF |
USDCAD |
AUDUSD |
NZDUSD |
GBPJPY |
EURJPY |
|
|
ATR(14) |
0.0139 |
0.0136 |
0.7228 |
0.0121 |
0.0076 |
0.0098 |
0.0089 |
1.2722 |
1.0444 |
|
ATR% |
1.06% |
0.88% |
0.88% |
1.27% |
0.76% |
0.97% |
1.17% |
1.01% |
0.97% |
|
20-5 Day SMA |
0.0074 |
0.0197 |
0.6422 |
0.0161 |
0.0026 |
-0.0149 |
0.0002 |
2.6396 |
1.4539 |
|
Boll. Band Width |
0.0427 |
0.0627 |
2.4321 |
0.0624 |
0.0247 |
0.0515 |
0.0302 |
7.2129 |
4.4675 |
|
1 wk Implied Vol |
9.8550 |
7.1800 |
7.6500 |
8.6100 |
7.8175 |
9.1200 |
9.5250 |
8.1250 |
9.3700 |
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To discuss this report or be added to the email list, contact John Rivera, Currency Analyst: jrivera@fxcm.com
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