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
EUR/USD
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
Oil - US Crude
Bullish
Wall Street
Bearish
Gold
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
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • Knowing how to accurately value a stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here: https://t.co/QszmdZFxlk https://t.co/eF0XS79LgK
  • The continuity seen across these volatility cycles is a good thing. Historical precedence offer a blueprint for identifying conditions supportive for a vol-event to occur, and how they may unfold. Deepen your knowledge of historical volatility here: https://t.co/vg7w10la3j https://t.co/gaYbbaTnpb
  • Get your snapshot update of the of relative currency strength and exchange status from around the globe here: https://t.co/H19vRDCpUJ https://t.co/HCvzbjEkr6
  • Get our analysts’ view on the key fundamentals for indices in Q2. Download now. https://t.co/Etdyanp76f https://t.co/n2wxfyMsJt
  • The Spinning Top candlestick pattern forms part of the vast Japanese candlestick repertoire with its own distinct features. Gain a better understanding of the spinning top candlestick here: https://t.co/DWm7cBMUg9 https://t.co/5KaUvfGM4I
  • There’s a strong correlation between interest rates and forex trading. Forex is ruled by many variables, but the interest rate of the currency is the fundamental factor that prevails above them all. Learn how interest rates impact currency markets here: https://t.co/J0EPMD2Cfi https://t.co/9Bjkh5413e
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/BdgFmkRxVw https://t.co/FqAsp91Gia
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/cKOUmtj7Dj
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/TnL91f7sl7
  • Human error in the forex market is common and often leads to familiar trading mistakes. These trading mistakes crop up particularly with novice traders on a regular basis. Learn about the top ten trading mistakes and how you can avoid them here: https://t.co/i8E2AXtzF3 https://t.co/cDcjl3Ue09
Euro Rate Outlook: RSI Indicator to Validate EUR/USD Breakout

Euro Rate Outlook: RSI Indicator to Validate EUR/USD Breakout

David Song, Strategist

EUR/USD Rate Talking Points

EUR/USD is on the cusp of breaking out of last month’s range as it comes up against the August high (1.1966), and the Relative Strength Index (RSI) may offer a bullish signal as the indicator approaches overbought territory.

Euro Rate Outlook: RSI Indicator to Validate EUR/USD Breakout

EUR/USD carves a series of higher highs and lows following thekneejerk reaction to the Federal Reserve Economic Symposium, and the RSI may indicate a further appreciation in the exchange rate as it appears to be breaking out of the downward trend established in August and pushes towards overbought territory.

It remains to be seen if the RSI will show an extreme reading like the behavior seen in July as the Federal Open Market Committee (FOMC) appears to be on track to retain the current policy at the next interest rate decision on September 16, and current market trends may persist throughout the remainder of the year as the central bank plans to “achieve inflation that averages 2 percent over time.

The remarks from Chairman Jerome Powell suggests the FOMC is in no rush to scale back its emergency measures even though the committee discusses an outcome-based approach versus a calendar-based forward guidance for monetary policy, and it seems as though the Fed will utilize its non-standard tools well beyond the US election as the “new Statement on Longer-Run Goals and Monetary Policy Strategy conveys our continued strong commitment to achieving our goals, given the difficult challenges presented by the proximity of interest rates to the effective lower bound.

Meanwhile, European Central Bank (ECB) board member Isabel Schnabel insists that “there is no reason to adjust the monetary policy stance” as the Euro Area appears to be operating near the baseline scenario, with the monetary union expected to show “a strong rebound in the third quarter.”

In turn, President Christine Lagarde and Co. may continue to emphasizes that the EUR 1.350 trillion envelope for the pandemic emergency purchase programme (PEPP) “should be considered a ceiling rather than a target, and the Euro may continue to outperform its US counterpart ahead of the next ECB meeting on September 10 as the central bank tames speculation for additional monetary support.

Nevertheless, the crowding behavior in the US Dollar looks poised to persist in September as retail traders have been net-short EUR/USD since mid-May, with the IG Client Sentiment report showing only 31.64% of traders net-long the pair as the ratio of traders short to long stands at 2.16 to 1.

Image of IG Client Sentiment for EUR/USD rate

The number of traders net-long is 22.49% higher than yesterday and 12.40% lower from last week, while the number of traders net-short is 11.92% higher than yesterday and 1.10% higher from last week.

The decline in net-long position could be indicative of profit-taking behavior as EUR/USD comes up against the August high (1.1966), while the rise in net-short interest suggests the tilt in retail sentiment will persist over the coming days even though the exchange rate appears to be on the cusp of breaking out of last month’s range.

With that said, current market conditions may keep EUR/USD afloat as the exchange rate carves series of higher highs and lows following the Fed symposium, and the Relative Strength Index (RSI) may show the bullish price action gathering pace as the indicator threatens the downward trend established in August and pushes towards overbought territory.

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, a ‘golden cross’ materialized in EUR/USD towards the end of June as the 50-Day SMA (1.1607) crossed above the 200-Day SMA (1.1170), with the moving averages extending the positive slopes into the second half of the year.
  • At the same time, a bull flag formation panned out following the failed attempt to close below the 1.1190 (38.2% retracement) to 1.1220 (78.6% expansion) region in July, with the Relative Strength Index (RSI) helping to validate the continuation pattern as the oscillator bounced along trendline support to preserve the upward trend from March.
  • However, the EUR/USD rally stalled following the failed attempt to break/close above the 1.1960 (38.2% retracement) to 1.1970 (23.6% expansion) region, with the RSI highlighting a similar dynamic as it slipped below 70 to flash a textbook sell signal.
  • Nevertheless, future developments in the RSI may help to validate a near-term breakout in EUR/USD as the indicator threatens the downward trend established in August and approaches overbought territory, with a move above 70 likely to be accompanied by a further appreciation in the exchange rate like the behavior seen in July.
  • Still need a close above the 1.1960 (38.2% retracement) to 1.1970 (23.6% expansion) region to bring the May 2018 high (1.1996) on the radar, with the next area of interest coming in around 1.2080 (78.6% retracement) to 1.2140 (50% retracement).

--- 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