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#1 11-01-2021 11:47:11

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 3069
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EUR/USD: dipping down below the 20-day moving average

EUR/USD: dipping down below the 20-day moving average


The USD confirmed for the third day in a row its rebalancing against the euro, with the support of a slight warming of Treasury yields, in a market that is betting on a sustained economic recovery...

...Notably through the support of the vaccine campaign against the virus, which is starting massively and with a very important adhesion of the population across the Atlantic, and via the assurance of the implementation of new massive stimulus measures by the Biden Administration as soon as he takes office next week.

Traders will however remain attentive to the development of the pandemic in Europe, and particularly in France where the vaccine campaign is extremely late, while fears of an uncontrollable spread of the new English variant of the virus are growing, with the risk of new restrictive measures. The euro, an active risk factor, was penalised in particular by the unprecedented rise in the number of new daily cases in China over the last few months.

According to data compiled by the John Hopkins University, whose work is an authority on the subject, serious forms of the virus have caused over 1,900,000 deaths.

On Friday's statistical side, the main event was the NFP (Non Farm Payroll) report on the health of American employment. According to the latest data from the Department of Labor, the U.S. economy has lost 139,000 jobs in the private sector (excluding agriculture), versus a target of +59,000. The disappointment is heavy, and this is an opportunity to underline once again the reliability of the ADP HR survey, which, 2 days before each publication of the monthly federal NFP report, publishes a study. ADP's estimates were good. It should be noted that the unemployment rate is falling slightly, to 6.6% of the US labour force, again according to the Department of Labour.

Today, already published overnight, the consumer price index (+0.2%) and the producer price index (-0.4%) in China both beat expectations. Disappointment this morning with the investor index (Sentix) in the Euro Zone, at 1.3 points this month, below consensus.

Right now, the pair is trading at $1.2166.

KEY CHARTS

This now validated break of the 20-day moving average (in dark blue) changes the technical framework that prevailed until now. After over 60 days of uninterrupted firm growth, the time is ripe for a downturn under the aforementioned short-term trend curve. Two technically identifiable points of support will arise, if need be, on the continuation of the ebb, at $1.2115 and $1.2000.

MEDIUM-TERM FORECAST

In view of the key chart factors we have mentioned, our opinion is positive in the medium term on the pair's exchange rate.

Our entry point is $1.2164. Our target price for our upward scenario is $1.2001. In order to preserve the capital employed, we advise you to position a protective stop at $1.2211.

The expected return on this forex strategy is 163 pips and the risk of loss is 47 pips.

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