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
Wall Street
Mixed
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
Euro Set to Test Key Support; Looking to Buy into Dip

Euro Set to Test Key Support; Looking to Buy into Dip

Joel Kruger, Technical Strategist
  • Greek lawmakers fail to form coalition government
  • China announces additional cut to RRR
  • Monday’s economic calendar is light; broader themes in play
  • Eurozone industrial production weaker than expected
  • Aussie below parity but supported on solid data and RBA comments

Failure for Greek lawmakers to form a coalition over the weekend leaves the markets in a risk off trade, and the Euro is looking to make fresh declines down towards next key support by 1.2800. Perhaps also potentially weighing on sentiment was the other weekend news, after China came out and announced yet another 50bp cut to the reserve requirement ratio. While we understand that there is reason to react positively to the news on the move for additional accommodation to help stimulate the economy, we also feel that the move underscores the severity of the slowdown in China and the potential impact it will have on correlated economies going forward.

Relative performance versus the USD Monday (as of 11:25GMT)

JPY +0.13%

GBP -0.01%

CHF -0.34%

EUR -0.36%

CAD -0.37%

AUD -0.39%

NZD -0.68%

Overall, the economic calendar for Monday is rather light and we suspect that markets will continue to trade off of broader themes. Eurozone industrial production was however rather discouraging despite some upward revisions, and this continued to pressure the currency. Elsewhere, Aussie has finally broken back below parity, while Kiwi has extended declines and stands out as the gross underperformer on the back of weaker retail sales data. Aussie setbacks have been somewhat supported however by solid local housing finance data and upbeat comments from RBA Lowe. Oversold technicals are also helping to keep the market supported in the 0.9900’s. Moving on, any weakness in the Yen earlier in the day was wiped clean, with USD/JPY reversing course sharply to trade well back under 80.00. It seems that the intensity of the risk off trade has overwhelmed the Yen market with a fresh wave of bids.

TRADE OF THE DAY

Currencies_Presured_As_Risk-Off_Headlines_Stand_Out_Across_the_Globe_body_EUR.png, Euro Set to Test Key Support; Looking to Buy into Dip

EUR/USD: While our core bias remains bearish, at this point we see the probability for some form of a corrective bounce back above 1.3000 before the market is to begin its final descent towards the yearly lows at 1.2625. Daily studies are now oversold, while the market looks to approach next key support in the form of the 78.6% fib retracement of the yearly low-high move by 1.2810. However, any additional short-term setbacks should be limited from there and once this 78.6% fib retracement is tested, technical studies will advocate strongly for a necessary bounce. STRATEGY: BUY @1.2810 FOR A 1.3050 OBJECTIVE; STOP-LOSS 1.2690.

--- 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

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

DISCLOSURES