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.

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
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Bearish
More View more
Real Time News
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: -0.13% Silver: -0.55% Gold: -0.57% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/Lgi1Jei5qJ
  • Apple earnings: EPS $0.73 vs $0.71 est Revenue $64.70B vs est $63.47B $AAPL
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.31%, while traders in NZD/USD are at opposite extremes with 66.78%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/k2e06fEjoh
  • ECB Pre-Commits to More Stimulus: ECB’s Lagarde had stated that the GC were in agreement that given the current backdrop, risks were clearly tilted to the downside. Get your market update from @JMcQueenFX here:https://t.co/KPjoDcQ0D0 https://t.co/vV1nprDCKL
  • Watch @PeterHanksFX, @DailyFX Equity Analyst covering the Earnings live - https://t.co/cpf5s3UvUn
  • Wow. Amazon blows out its EPS $12.37 vs $7.37. Google did $16.40 against $11.42. Even Facebook $2.71 versus $1.91. @PeterHanksFX talking about it now: https://t.co/37dmgWZQhn
  • Facebook Earnings: EPS $2.71 vs est $1.91 Revenue $$21.47B vs est $19.84B $FB
  • Alphabet Earnings: EPS $16.40 vs est $11.42 Revenue Ex-tac $38.01B vs est $35.35B $GOOG
  • Amazon Earnings Q3 EPS $12.37 vs est $7.37 Revenue $96.1B vs est $92.71B $AMZN
  • Indices Update: As of 20:00, these are your best and worst performers based on the London trading schedule: FTSE 100: 0.71% France 40: 0.45% Germany 30: 0.41% US 500: 0.05% Wall Street: 0.05% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/9I7hxzLRLd
EUR/USD Outlook Unfazed by FOMC Minutes as Risk Appetite Improves

EUR/USD Outlook Unfazed by FOMC Minutes as Risk Appetite Improves

2020-10-08 05:00:00
David Song, Strategist
Share:

EUR/USD Rate Talking Points

EUR/USD appears to be unfazed by the Federal Open Market Committee (FOMC) Minutes even though the central bank warns of a protracted recovery, and the Relative Strength Index (RSI) indicates a further appreciation in the exchange rate as it breaks out of the downward trend carried over from late July.

Advertisement

EUR/USD Outlook Unfazed by FOMC Minutes as Risk Appetite Improves

EUR/USD continues to mimic the recovery in global equity prices as the improvement in risk appetite weighs on the US Dollar, and the decline from the yearly high (1.2011) may prove to be an exhaustion in the bullish trend rather than a change in market behavior as the European Central Bank (ECB) appears to be in no rush to alter the path for monetary policy.

In a recent interview with Boersen-Zeitung, Bundesbank President Jens Weidmann appeared to be taming speculation for additional monetary stimulus as the Governing Council member insists that “the monetary policy stance is currently appropriate.”

Image of DailyFX economic calendar for euro area

In turn, the account of the ECB’s September meeting may continue to highlight 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 transcript may foreshadow more of the same for the next interest rate decision on October 29 as the economic recovery in the Euro Area appears to be broadly tracking the baseline scenario laid out by the central bank.

Until then, a further improvement in risk appetite may keep EUR/USD afloat amid the inverse relationship between the US Dollar and investor confidence, and it looks as though the tilt in retail sentiment will also persist in October as traders have been net-short the pair since mid-May.

Image of IG Client Sentiment for EUR/USD rate

The IG Client Sentiment report shows 35.37% of traders are net-long EUR/USD, with the ratio of traders short to long standing at 1.83 to 1. The number of traders net-long is 1.25% lower than yesterday and 0.57% higher from last week, while the number of traders net-short is 0.62% lower than yesterday and 16.46% higher from last week.

The recent decline in net-long position could be a function of profit-taking behavior as EUR/USD retains the advance from the September low (1.1612), but the growingtilt in retail sentiment may bring back the extreme readings from earlier this year as 38.79% of traders were net-long the pair at the start of the month.

With that said, swings in risk appetite may continue to sway EUR/USD as key market themes carry into October, and the pullback from the yearly high (1.2011) may prove to be an exhaustion in the bullish trend rather than a change in market behavior as the Relative Strength Index (RSI) breaks out of the downward trend carried over from late July.

How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by David Song
Learn More About the IG Client Sentiment Report
Get My Guide

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 (1.1799) crossed above the 200-Day SMA (1.1261), with the moving averages still tracking the positive slopes from earlier this 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 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 ultimately break trendline support.
  • A similar scenario materialized in September even though EUR/USD traded to a fresh yearly high (1.2011) at the start of the month, with the exchange rate taking out the August low (1.1696) after staging another failed attempt to close above the 1.1960 (38.2% retracement) to 1.1970 (23.6% expansion) region.
  • Nevertheless, the pullback from the yearly high (1.2011) may prove to be an exhaustion in the bullish price action rather than a change in trend amid the failed attempt to break/close below the 1.1600 (61.8% expansion) to 1.1640 (23.6% expansion) region, with the RSI highlighting a similar dynamic as it reverses ahead of oversold territory and breaks of the downward trend carried over from the end of July.
  • Need a break/close above the Fibonacci overlap around 1.1810 (61.8% retracement) to 1.1850 (100% expansion) to bring the 1.1960 (38.2% retracement) to 1.1970 (23.6% expansion) region on the radar, with a move above the 2020 high (1.2011) opening up the 1.2080 (78.6% retracement) to 1.2140 (50% retracement) area.
Traits of Successful Traders
Traits of Successful Traders
Recommended by David Song
Traits of Successful Traders
Get My Guide

--- 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