Talking Points:
- Daily 8-EMA has caught up to EURUSD price consolidation.
- EURGBP finds resistance at daily 13-EMA.
- See the DailyFX Economic Calendar for Monday, February 2, 2015.
In a headline-driven market - one that decouples from fundamentals - it's best to rely on technical observations to discern bias. Such may be the case in the EUR-complex this week, now that we've entered a veritable purgatory between the Greek-Troika negotiations for debt relief and the start of the European Central Bank's QE program in March.
Our primary focus is thus on two of the shorter-term trends that have been guiding several major EUR-crosses the past few weeks. In EURUSD, the daily 8-EMA, which has served as resistance since December 17, is very much in question. Notably, on the H4 timeframe, we note that MACD has held below its neutral line the entire time price has been below the daily 8-EMA.
With price readying to eclipse its key moving average and MACD nearing a flip to bullish territory, there is sufficient evidence - especially when taking into consideration the retail crowd's net-short position - that EURUSD may have the elements of a short-term bottom forming.
After some weaker manufacturing data this morning, the British Pound is trading back near last week's lows versus the US Dollar; and that helps bring EURGBP into focus. Instead of the daily 8-EMA, it is the 13-EMA that has been the critical resistance for price the past month. In light of the duration of these trends (when viewed on the H4 timeframe), we'd need to see a daily close beyond said levels in order to signal a broader trend shift.
See the above video from technical considerations in EURUSD, GBPUSD, and EURGBP.
Read more: Euro Enters Headline-Driven Cycle as Market Awaits March QE Launch
--- Written by Christopher Vecchio, Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
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