EURUSD: the pair strayed,two Scenarios

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Thread: EURUSD: the pair strayed,two Scenarios

  1. #1
    Junior Member CarlosR's Avatar
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    Default EURUSD: the pair strayed,two Scenarios

    EURUSD: the pair strayed,two Scenarios
    In the European session, the euro dropped after reports from Germany, where the Social Democrats are split on whether or not to join in a coalition government with Angela Merkelís Christian Democrats. Later, a Reuters report intensified the downwards pressure on the pair. The agency reported that the ECB is unlikely to taper its bond purchasing program at their meeting next week.

    During trading in the US, the euro bulls completely recovered their losses. Buyers gradually pushed the price back up to the 1.2240 resistance over the course of 4 hours. As soon as this barrier was overcome, the pairís growth gathered pace. Traders are once again losing interest in the US dollar.


    In Asia, the euro has risen by 56 pips to reach 1.2323 in the space of 2 hours. I couldnít find a reason for shorting the dollar so Iíve laid out 2 possible scenarios on todayís chart.

    Due to the 85-pip drop on the euro to 1.2238, we have a contradictory situation. Now Iíll explain why.

    First of all, the situation in Germany with regards to forming a coalition government has yet to be resolved. Secondly, the euroís rise is being hindered by the upcoming ECB meeting. Thirdly, a pin bar model is forming on the daily timeframe. If the day closes at 1.2245 or lower, this will create a sell signal.

    On the other hand, the trend is bullish. As we can see, despite all the negative news surrounding the euro, a lot of long positions were opened on it as it dropped to the LB balance line, leaving a long shadow on the candlestick behind them. The pin bar isnít fully formed yet, so this could all go out the window by the end of the day.

    So, whatís going to happen?

    Scenario 1: continued decline on the euro to the lower boundary of the channel (at 1.2212), strengthening the bearish daily candlestick. If we see drop below 1.2195 on the hourly timeframe, thereís a possibility of a double top forming. The double bearish divergence between the price and the AO indicator works in favour of this scenario.

    Scenario 2: price rebound from the 67th degree with subsequent growth to 1.2240.


    The European calendar is virtually empty today. The only important report to come out is Eurozone CPI data. Todayís main event is the Bank of Canadaís meeting followed by a press conference with Governor Steven Poloz. Markets are expecting a 25-base-point hike to interest rates. Itís still unclear how markets will react to this. See more in foreign exchange course of Alpari Broker
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    Default currency is trading at 1.2457

    in ro ham eslah kon:
    Today, ahead of the European trading session, the single currency is trading at 1.2457 against the greenback, while the US dollar index (DXY) is at 88.82. This marks a rise of around 80 pips on the EURUSD pair over the last 24 hours, which is mostly the result of weak inflation and retail sales data from the US in January, both of which were published yesterday at 16:30 EET.

    Retail sales in the US dropped by 0.3% in January compared to December, which gave investors serious cause for concern. Additionally, inflation grew by 0.5% month on month as a result of a surge in energy prices rather than as a result of economic growth. These negative figures cast doubt on continued stable economic growth in the US, which is therefore weighing down on the dollar.Source: "Forex market review (15/02/18)"

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