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.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Mixed
USD/JPY
Bearish
Gold
Bearish
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
Bitcoin
Bullish
More View more
Real Time News
  • LIVE NOW: In this session, Currency Analyst @ddubrovskyFX discusses traders' positioning as a key element of market analysis to determine the prevailing and future price trends. https://www.dailyfx.com/webinars/998956395
  • South Korea #coronavirus cases top 1,000. For perspective, it was 51 a week ago.
  • Markets after realizing they may have to contend with reignited US-China trade tensions, #coronavirus and a neutral Fed all at the same time: https://t.co/PlC75iOY13
  • The $USD may rise against the Malaysian Ringgit after Prime Minister Mahathir Mohamad resigned. Bank of Malaysia may cut rates on #coronavirus fears with fiscal stimulus uncertain. Get your market update from @ddubrovskyFX here: https://t.co/WSx7FEf6W6 https://t.co/byzavtwAo5
  • LIVE IN 30 MIN: In this session, Currency Analyst @ddubrovskyFX discusses traders' positioning as a key element of market analysis to determine the prevailing and future price trends. https://www.dailyfx.com/webinars/998956395
  • The British Pound, #Euro and Japanese #Yen rose versus the US Dollar. #Coronavirus fears sank stocks and increased #Fed rate cut bets. The $GBPUSD technical bias still points lower #USD - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2020/02/26/British-Pound-Euro-Yen-Gain-as-US-Dollar-Weakens-in-Tense-Session.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/qupkKdbHms
  • Join @ddubrovskyFX 's #webinar at 8:00 PM ET/1:00 AM GMT to find out what information you can gain from knowing what other traders are buying or selling. Register here: https://t.co/Bb3CTDaWVC https://t.co/BlxHOemKwy
  • China is "fully expected" to meet terms outlined in "Phase 1" of the US-China trade deal despite the outbreak of the #coronavirus according to top US officials (SCMP) - First Squawk Could you imagine the pandemonium if markets had to contend with #covid19 and reignited tensions?
  • The #coronavirus has revealed that these debt markets are more susceptible to economic shocks than imagined".
  • has alleviated the anxiety of a region-wide default. Consequently, investors have grown more comfortable with investing in riskier assets (both sovereign and corporate) while underwriting standards for the latter deteriorate.
Euro Takes Out Psychological Barriers at 1.3000; Exposes 2011 Lows

Euro Takes Out Psychological Barriers at 1.3000; Exposes 2011 Lows

2011-12-14 12:08:00
Joel Kruger, Technical Strategist
Share:
  • Euro close below 1.3145 and break of 1.3000 exposes 2011 lows
  • Fear of European downgrades and Merkel comments weigh
  • Fed mildly upgrades outlook for economy
  • Italian bond auction in focus for Wednesday trade
  • UK data mixed; Eurozone releases disappoint

Price action on Tuesday was rather significant as the Euro finally managed to break and close below the critical October lows to signal the start to the next major downside extension. Our core bias remains currency bearish/USD bullish and from here we project an acceleration of Euro declines back into the lower 1.2000’s over the coming months. Next key support for the Euro comes in by 1.2870 which represents the yearly low from all the way back in January. With 2011 now marching to a close, after all is said and done, we could be on course to close in the same area where the year began.

Relative performance versus the USD on Wednesday (as of 11:50GMT)

  1. GBP +0.11%
  2. JPY -0.01%
  3. CAD -0.05%
  4. CHF -0.14%
  5. EUR -0.19%
  6. AUD -0.21%
  7. NZD -0.40%

The outlook for the Eurozone remains highly uncertain, and fear of a wave of downgrades any day now, coupled with some negative comments from Germany’s Merkel (recently rejected proposal for increase in upper limit of ESM from EUR500B), have not been helping sentiment, and could result in more risk liquidation over the coming sessions. Meanwhile, the Fed has mildly upgraded their outlook for the US economy, and at the same time has not discussed any possibility for additional quantitative easing measures. While market participants might be unhappy with the failure to consider additional accommodation, the development is net net USD bullish and could inspire a narrowing of yield differentials back in favor of the US Dollar.

On the data front, UK employment was mixed, while Eurozone industrial production was a good deal softer than consensus. Italian auction results were also less than stellar and all of this helped to take the market below 1.3000 barriers. We would however stress that as we head into the final days of trade for the year, markets will likely lighten up dramatically to make for less than ideal trading conditions. While we retain a very bearish currency outlook, we would not rule out the possibility for some short-term reversals back in favor of currencies before we see some renewed selling.

ECONOMIC CALENDAR

Euro_Takes_Out_Psychological_Barriers_at_1.3000_Exposes_2011_Lows_body_Picture_5.png, Euro Takes Out Psychological Barriers at 1.3000; Exposes 2011 Lows

TECHNICAL OUTLOOK

Euro_Takes_Out_Psychological_Barriers_at_1.3000_Exposes_2011_Lows_body_eur.png, Euro Takes Out Psychological Barriers at 1.3000; Exposes 2011 Lows

EUR/USD: The market has finally taken out the key October lows at 1.3145 to confirm a lower top by 1.3550 and open the next downside extension towards the 2011 lows from January at 1.2870. Daily studies are however looking a little stretched and at this point we could see some corrective action before the market resumes its downward trajectory. Look for any rallies to be well capped in the 1.3300 area from where the next lower top will be sought out.

Euro_Takes_Out_Psychological_Barriers_at_1.3000_Exposes_2011_Lows_body_jpy2.png, Euro Takes Out Psychological Barriers at 1.3000; Exposes 2011 Lows

USD/JPY:The market has managed to successfully hold above the bottom of the daily Ichimoku cloud to further strengthen our constructive outlook and we look for the formation of a inter-day higher low by 76.55 ahead of the next major upside extension back towards and eventually through the recent multi-day highs by 79.55. Ultimately, only a close back below the bottom of the Ichimoku cloud would negate outlook and give reason for pause, while a daily close back above 78.30 accelerates.

Euro_Takes_Out_Psychological_Barriers_at_1.3000_Exposes_2011_Lows_body_gbp2.png, Euro Takes Out Psychological Barriers at 1.3000; Exposes 2011 Lows

GBP/USD: Rallies have been very well capped ahead of 1.5800 and it looks as though a lower top has now been carved out by 1.5780 ahead of the next major downside extension back towards the October lows at 1.5270. Key support comes in by 1.5420 and a daily close below this level will be required to confirm bias and accelerate declines. Ultimately, only back above 1.5780 would negate bearish outlook and give reason for pause.

Euro_Takes_Out_Psychological_Barriers_at_1.3000_Exposes_2011_Lows_body_swiss1.png, Euro Takes Out Psychological Barriers at 1.3000; Exposes 2011 Lows

USD/CHF: The recent break above the critical October highs at 0.9315 is significant and now opens the door for the next major upside extension over the coming weeks back towards parity. A confirmed higher low is now in place by 0.9065 following the recent break over 0.9330, and next key resistance comes in by 0.9785. Ultimately, only back under 0.9065 would delay constructive outlook.

--- Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

For those interested in our Education reports, feel free to click here for an overview of Bollinger Bands.

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

DISCLOSURES

News & Analysis at your fingertips.