News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The 2022 forecast for Fed Fund futures has surged to its highest on record (fully pricing in two 25bp rate hikes) and you can see it in the 2-10 Treasury yield spread this past session: https://t.co/5qMg2X8MX1
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.20% 🇨🇭CHF: 0.06% 🇪🇺EUR: 0.05% 🇬🇧GBP: -0.02% 🇨🇦CAD: -0.06% 🇦🇺AUD: -0.19% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/Y9B3C6uhBW
  • Wow, Australian 2-year yield jumps to highest since March 2020 in incredible surge (+62%) as #RBA withholds from defending the 2024 yield target today? (3Y up too) This is raising speculation the CB could be rethinking YCC Australian Dollar could not be bothered #AUD $AUDUSD https://t.co/eX3in6oINH
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 89.56%, while traders in AUD/JPY are at opposite extremes with 74.09%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/i60JbX6qIo
  • The US Dollar might be stabilizing against ASEAN currencies as inflationary woes resurface ahead of GDP and PCE data. Amazon, Apple and Facebook earnings may also drive sentiment ahead. Get your market update from @ddubrovskyFX here:https://t.co/tY5dOmDIWS https://t.co/CvBV8Zcpxh
  • RBA Deputy Governor Debelle says a little more inflation is welcome - BBG
  • - Managed isolation and quarantine (MIQ) reduced to 7 from 14 days effective November 14 - BBG
  • The Australian Dollar has had a period of strengthening against most currencies but there might be some challenges ahead. Will the Australia Dollar go higher? Find out here: https://t.co/0wRHCXnUCO https://t.co/ZuX4YjBUX1
  • New Zealand's Hipkins says Christchurch at alert level 2 - BBG
  • 🇯🇵 Foreign Bond Investment (23/OCT) Actual: ¥-604.5B Previous: ¥1225.4B https://www.dailyfx.com/economic-calendar#2021-10-27
EUR/USD Bull Flag Formation in Focus as RSI Tracks Bullish Trend

EUR/USD Bull Flag Formation in Focus as RSI Tracks Bullish Trend

David Song, Strategist

EUR/USD Rate Talking Points

EUR/USD reverses ahead of the June low (1.1101) despite little progress for a European recovery fund, and a bull flag formation may unfold over the coming days as the Relative Strength Index (RSI) preserves the bullish formation from March.

EUR/USD Bull Flag Formation in Focus as RSI Tracks Bullish Trend

EUR/USD carves a series of higher highs and lows even though the European Council meeting on June 19 offered no new details for a COVID-19 recovery fund, and the exchange rate may stage a larger advance ahead of the update to the Euro Zone Consumer Price Index (CPI) as the European Central Bank (ECB) appears to be taming speculation for additional monetary support.

In a recent interview, ECB Vice-President Luis de Guindos defended the decision to expand the Pandemic Emergency Purchase Programme (PEPP) by EUR 600B to EUR 1.350 trillionin June, but pointed out that the asset purchases are “temporary” as the unconventional tool is set to expire in June 2021.

At the same time, Bundesbank President Jens Weidmann insists the PEPP is temporary in nature” while speaking in Frankfurt, with the Governing Council official going onto say that “policy makers must not assume that we would keep the financing costs of governments low forever or iron out any differences in sovereign-risk premia.”

The comments suggest the ECB is in no rush to deploy more non-standard measures as “euro area activity is expected to rebound in the third quarter,” and the central bank may soften the dovish forward guidance at the next meeting on July 16 as European Council President Charles Michel vows to ‘start real negotiations with the member states, and will convene an in-person summit, around mid-July in Brussels.’

Efforts to pass the proposed EUR 750B recovery fund may push the ECB to the sidelines even though the Governing Council stands ready to “adjust all of its instruments,” and the reluctance to implement lower interest rates may keep EUR/USD afloat as President Christine Lagarde and Co. appear to be on track to retain the current policy in the second half of the year.

In turn, EUR/USD may stage another attempt to test the March high (1.1495) as the exchange rate reverse ahead of the monthly low (1.1101), and a bull flag formation may unfold over the coming days as the Relative Strength Index (RSI) preserves the bullish formation from March.

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss key themes and potential trade setups surrounding foreign exchange markets.

EUR/USD Rate Daily Chart

Image of EUR/USD rate daily chart

Source: Trading View

  • Keep in mind, the monthly opening range was a key dynamic for EUR/USD in the fourth quarter of 2019 as the exchange rate carved a major low on October 1, with the high for November occurring during the first full week of the month, while the low for December happened on the first day of the month.
  • The opening range for 2020 showed a similar scenario as EUR/USD marked the high of the month on January 2, with the exchange rate carving the February high during the first trading day of the month.
  • However, the opening range for March was less relevant amid the pickup in volatility, with the pullback from the yearly high (1.1495) producing a break of the February low (1.0778) as the exchange rate slipped to a fresh 2020 low (1.0636).
  • Nevertheless, EUR/USD appeared to be on track to test the March high (1.1495) after breaking out of the April range, but the exchange rate struggles to retain the advance from the start of the month amid the failed attempt to close above the Fibonacci overlap around 1.1390 (61.8% retracement) to 1.1400 (50% expansion).
  • It remains to be seen if a bull flag formation will unfold over the coming days as the Relative Strength Index (RSI) bounces from trendline support to preserve the bullish formation from May, with a break/close above the 1.1270 (50% expansion) to 1.1290 (61.8% expansion) region bringing the 1.1340 (38.2% expansion) area on the radar.
  • Next hurdle comes in around 1.1390 (61.8% retracement) to 1.1400 (50% expansion) followed by the Fibonacci overlap around 1.1430 (23.6% expansion) to 1.1450 (50% retracement), which largely lines up with the monthly high (1.1423).

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

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

DISCLOSURES