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EUR/USD Trading Around the 1.1400 Handle, Draghi Speech Ahead

EUR/USD Trading Around the 1.1400 Handle, Draghi Speech Ahead

2016-06-09 06:50:00
Oded Shimoni, Junior Currency Analyst
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Talking Points:

- EUR/USD currently trades slightly below 1.1400 after breaking above yesterday

- Draghi speech in Brussels the focus in an otherwise quiet economic calendar

- GSI is a powerful big data indicator that can help you determine whether short-term trends will continue or reverse

The EUR/USD currently trades slightly below 1.1400 (at the time this report was written) after the pair moved higher yesterday, but follow-through might prove limited on a quiet economic calendar. The lack of major event risk could put “risk trends” in the spotlight again today, as the 10-day correlation between the EUR/USD and the SPX 500 is 0.77 at the time of writing.

With that said, Draghi Speaks at an economic forum in Brussels right on London open and may shake things up later. An otherwise quiet economic calendar, and low volatility may imply that technical levels could hold as we look to find short term trading opportunities using the Grid Sight Index (GSI) indicator.

EUR/USD Trading Around the 1.1400 Handle, Draghi Speech Ahead

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ECB’s President Mario Draghi is set to speak at an economic forum in Brussels at 07:00 GMT today, and could potentially provide some market moving comments. The market may be interested to hear Draghi’s comments on future monetary policy, after the ECB meeting last week seemed to have confirmed that the bank is in “implementation mode” of the stimulus measures announced in March. Interestingly, the meeting was held before the US Dollar plunge on the back a very weak NFP report. The Euro traded approximately 250 pips lower at the time.

US Initial Jobless Claims and Continuing Claims is set to hit the wires in US trading hours. The Initial Jobless Claims measure is expected to print 270K, higher than the 267K prior print. The Continuing Claims figure is set to contract slightly to 2171K versus the prior 2172K print. It might be interesting to see if the market gives more significance to the figures following the abysmal NFP report this past Friday.

The US Household Change in Net Worth (1Q) is set to hit the wires as well, but the figures' more macro implications might imply that short term volatility is unlikely.

EUR/USD 5-Min GSI Chart: June 9, 2016

EUR/USD Trading Around the 1.1400 Handle, Draghi Speech Ahead

The EUR/USD is edging lower heading into London open. The GSI indicator above calculates the distribution of past event outcomes given certain momentum patterns, and can give you a look at the market in a way that's never been possible before, analyzing millions of historical prices in real time. By matching events in the past, GSI describes how often the price moved in a certain direction.

You can learn more about the GSI here.

EUR/USD Technical Levels:

EUR/USD Trading Around the 1.1400 Handle, Draghi Speech Ahead

Click here for the DailyFX Support & Resistance tool

We use volatility measures as a way to better fit our strategy to market conditions. Neutral perceived trading conditions and reduces volatility might imply that technical levels could hold in today’s trade, with the aforementioned event risk as a possible invalidation of that bias for a shift to breakout type trades. Close attention may be put today on risk assets movement, to help gauge the appropriate action on the pair.

EUR/USD 30-Min Chart With SPX 500 Overlay: June 9, 2016

EUR/USD Trading Around the 1.1400 Handle, Draghi Speech Ahead

The EUR/USD is pivoting around the 1.1400 handle, which could imply that a clear move away from the level may have importance signaling directional conviction.

The pair is edging lower at the time of writing and short term support might be found at 1.1388, followed by a support zone at 1.1379-1.1368. Another support zone may be found around 1.1350- 1.1340.

Levels of interest on a move higher might be 1.1415, followed by a resistance zone at 1.1430- 1.1450, and another resistance zone at 1.1467- 1.1483.

When price reaches those levels, short term traders might use the GSI to view how prices reacted in the past given a certain momentum pattern, and see the distribution of historical outcomes in which the price reversed or continued in the same direction.

A common way to use GSI is to help you fade tops and bottoms, and trade breakouts. That’s why traders may want to use the GSI indicator when price reaches those specific pre-determined levels, and fit a strategy that might offer a proper way to define risk.

Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing thatabout 37.91% of traders are long the EUR/USD at the time of writing. The SSI is mainly used as a contrarian indicator, implying further strength ahead for the pair.

You can find more info about the DailyFX SSI indicator here

--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com

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

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