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EUR/USD Extends Losses on Yellen's Commentary

EUR/USD Extends Losses on Yellen's Commentary

Walker England, Forex Trading Instructor

Talking Points:

The EUR/USD is currently bouncing off of lows of the day, and has declined as much as 272 pips for this week’s trading. This move has predominantly been predicated on recent speculation that the US Federal Reserve will hike rates in December. Janet Yellen has helped perpetuate this speculation with her statement yesterday that a rise in rates may come “Fairly Soon.”

Technically this decline has been denoted with the EUR/USD closing lower in the preceding 9 trading session. If the pair closes higher for Friday, this should be seen as significant as it would be the first sign that the EUR/USD may be supported in the short term. As such, traders should continue to earnestly watch today’s current low at 1.0581 for confirmation of a trend continuation or reversal.

EUR/USD Daily Chart

EUR/USD Extends Losses on Yellen's Commentary

(Created Using TradingView Charts)

Intraday, the EUR/USD may be considered range bound. As seen below, the pair remains locked between key values of pivot support and resistance. Pivot support is found today at the S3 pivot at 1.0590. So far prices have tested this point, but have failed to significantly break below them. If the pair remains supported here, it opens the EUR/USD to trade back towards resistance. This includes the R3 pivot found at 1.0660.

In the event that prices begin to trade lower, it should be noted that bearish breakouts may be signaled beneath the S4 pivot at 1.0565. A move through this point would place the EUR/USD at new daily lows and would likely set the pair up to close lower for the 10th consecutive session. Alternatively bullish breakouts may be signaled over 1.0694. A reversal in the trend to this point, would be seen as a rejection of current bearish momentum and may suggest a broader pullback for the pair.

EUR/USD 30 Minute with Pivots

EUR/USD Extends Losses on Yellen's Commentary

(Created Using TradingView Charts)

Lastly, traders tracking sentiment should note that current SSI (Speculative Sentiment) readings for the EUR/USD stand at +2.25. With 69% of traders long the EUR/USD, this is typically used as a contrarian signal used to confirm an ongoing downtrend. If the EUR/SUD continues to decline, it would be expected to see this total remain near present extremes. Alternatively if the pair does begin to retrace, we may expect to see SSI readings move back towards more neutral totals.

EUR/USD Extends Losses on Yellen's Commentary

Copper Price, Daily Chart with 10 Period EMA

(Created Using TradingView Charts)

--- Written by Walker, Analyst for DailyFX.com

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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