Video

Kim Cramer Larsson
Areas covered in this webinar by Saxo Bank technical analyst Kim Cramer Larsson include EURUSD, USDJPY, GBPUSD, EURGBP, gold, silver, S&P 500, the Nasdaq, the Dax, the FTSE and the Dow Jones.
Short term
Trade view / 27 August 2014 at 4:11 GMT

EURUSD: Further weakness ahead

Managing Director / Technical Research Limited
New Zealand
Instrument: EURUSD
Price target:
Market price:
Background

European bond yields declined again yesterday – especially in the periphery – as markets continue front-running what they expect to see announced at the European Central Bank's Governing Council meeting and press conference on September 4: a quantitative easing program. See my earlier article on this situation: Avoid trying to bottom pick in EURUSD.
 
There were no economic data releases of note in the Eurozone yesterday. Instead traders were keeping an eye on developments in the Russia/Ukraine stand-off. However, on Friday we will receive the flash estimate for the August consumer price index, which is expected to show inflation crawling along at 0.3% on an annual basis. This won’t please ECB policymakers. Later on yesterday we saw the US data dump and it was generally positive; indeed positive enough to send the stock market to new highs across the board. This added a slight bid tone to the USD.

Management and risk description

The EUR's downtrend persists and despite being “oversold”, there is still opportunity for further weakness ahead. In the short term, I suspect resistance at 1.3185/1.3200 now contains for a test of the low 1.3100s, then 1.3065 (with potential to extend the decline towards the low 1.2900s over the coming days – refer to the daily chart below).

Parameters

Entry:  Selling EUR about 1.3175 

Stop:  1.3204 initially, trailing stop to break-even and better once 1.3145 is broken

Target: 50% at 1.3115 and 50% at 1.3070

Time horizon: two days 

EURUSD daily chart
EURUSD daily chart
Source: Reuters

– Edited by Gayle Bryant

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5y
Max McKegg Max McKegg
Whilst 1.3200, 1.3220 max. contains today, await break below 1.3155 to test 1.3110, then 1.3065/1.3050

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