If the
EURUSD pair finishes down today, Friday, it will have completed a second week
outside the lower bound of its most recent upward rising channel, which came
into effect in the first quarter of this year. The latest accelerant for this move
will have been the US Federal Reserve FOMC monetary policy announcement on
Wednesday, which was unexpectedly hawkish and therefore a positive for the
dollar.
In addition
to a possible break to the downside of the channel, it can be seen from the
chart above that the 200 period Exponential Moving Average (EMA) on the weekly
chart is sloping downward. This
indicates that the dominant long-term trend for the Single Currency is down.
Constructing
trend channels of this sort is not an exact science and, while there is now the
inevitable chatter on the wires about the possibility of Euro-dollar reaching
parity, this has happened before and the Euro has always proven to be
resilient, to say the least.
If this year’s
upward trend has indeed been broken, then the next significant support level
for this pair is at the 1.08 round number. After that. 1.0463, or the low set
on the 8th March of this year, becomes the one to watch.
Next week’s fundamentals are critical
The economic
release that will tell the tale next week for the EURUSD pair is the US Nonfarm
Payroll report, out on Friday, although Thursday sees the monetary policy
statement, Interest Rate and Asset Purchase Facility decision, as well as the
minutes of the Monetary Policy Committee (MPC) meeting, from the Bank of
England. Any surprises here will also impact EURUSD.
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