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#1 08-10-2019 09:52:21

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Registered: 21-12-2009
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EUR/USD: the euro seems unable to exceed 1.10 (Nordea Bank)

EUR/USD: the euro seems unable to exceed 1.10 - is a new decline in the cards? (Nordea)

After a sharp rise last week, the EUR/USD pair continued to rise yesterday, managing to mark a new marginal peak right on the key psychological threshold of 1.10.

Last week, and for the record, a series of disappointing US stats had increased the market's perception of the risk of the Fed lowering its rates again before the end of the year, which put pressure on the greenback, and mechanically sent the EUR/USD upwards.

It should be noted that the manufacturing ISM and the services ISM had posted unexpected declines, while the NFP report on US job creation had been mixed, containing both good and bad news.

Yesterday, doubts about the China-USA trade negotiations scheduled for Thursday had kept the dollar under pressure. China has indeed announced that some important issues for the United States will not be discussed this week, which could hurt President Trump.

On the other hand, it is also possible that the two countries will sign an agreement on the least sensitive points of the negotiations in order to reassure the markets, postponing negotiations on the more difficult issues.

In any case, investors are now reluctant to be too optimistic regarding this week's meetings with China.

Technical analysis

From a technical point of view, it should be noted that yesterday's 1.10 test is a positive signal, although this threshold remains a key resistance level for the time being.

It should also be pointed out that the 100-hour moving average broke above the 200-hour moving average yesterday morning, which is also an important bullish signal.

If the EUR/USD pair manages to cross the major psychological threshold of 1.10, the next priority resistance levels to watch for will be 1.1025, 1.1050 and 1.11.

To the downside, 1.0950-60 is the first major support level, and a break above this threshold would call into question the possibilities of an upward movement. In this case, the psychological threshold of 1.09 and the annual low of 1.0880 will be the first logical targets.

EUR/USD hourly chart

What are the banks' forecasts for the pair?

Nordea, for one, does not believe in a break above 1.10.

The bank advises traders to position themselves for short EUR/USD positions from 1.1000, with a target of 1.0760 and a stop loss at 1.1100.

The bank cites the global slowdown and the Fed's liquidity problems as factors leading to a decline in the eurodollar.

Other bank analysts also see the euro dropping in the short to medium term:

"We expect that the anticipation and implementation of the easing of the ECB's monetary policy in December will lead to a reduction in key euro area market interest rates and falling bond yields as we approach (or shortly after) this December meeting."

"The combination of the slow eurozone economic growth and the ECB's continued easing clearly has the potential to have a greater impact on the euro."

"Risks for the euro remain on the downside and a further decline of the EUR/USD remains a possibility in the short term."

"The euro has been declining against the US dollar since early 2018, and the combination of slow economic growth in the euro area and further easing by the ECB clearly has the potential to weigh down on the euro."

"Anything worth having is worth going for - all the way." - J.R. Ewing



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