Jump to content

EUR/USD Eyes 2021 Low Ahead of Fed Meeting as ECB Defends Dovish Guidance


Recommended Posts

EUR/USD RATE TALKING POINTS

EUR/USD extends the series of lower highs and lows from the previous week as European Central Bank (ECB) officials defend the dovish forward guidance for monetary policy, and the exchange rate appears to be on track to test the yearly low (1.1664) following failed attempt to clear the July high (1.1909).

EUR/USD dropped by nearly 1.10-Industry Global News24

 

EUR/USD EYES 2021 LOW AHEAD OF FED MEETING AS ECB DEFENDS DOVISH GUIDANCE

EUR/USD is on pace to mark a three day losing streak for the second time this month as the ECB tames speculation for a shift in monetary policy, with Governing Council Isabel Schnabel pledging to “act more patiently” as the central bank struggles to achieve its one and only mandate for price stability.

In a recent speech, Schnabel insists that the ECB needs “to see clearer signs that inflation is reliably moving towards our 2% target” before the central bank switches gears as “inflation is still expected to be below our 2% target in the medium term.” As a result, Schnabel argues that the non-standard tools “will remain crucial in the time to come, paving the way out of the pandemic and towards reaching our inflation target,” and the comments suggest the ECB is in no rush to normalize monetary policy “given the remaining uncertainty regarding the pandemic and the economic and inflation outlook.”

In turn, EUR/USD may remain under pressure ahead of the Federal Reserve interest rate decision on September 22 as Chairman Jerome Powell and Co. appear to be on track to deliver an exit strategy, but a further decline in the exchange rate may fuel the recent flip in retail sentiment like the behavior seen earlier this year.

Image of IG Client Sentiment for EUR/USD rate

The IG Client Sentiment report shows 61.27% of traders are currently net-long EUR/USD, with the ratio of traders long to short standing at 1.58 to 1.

The number of traders net-long is 6.63% higher than yesterday and 21.45% higher from last week, while the number of traders net-short is 12.85% higher than yesterday and 24.98% lower from last week. The rise in net-long interest has fueled the flip in retail sentiment as 50.70% of traders were net-long EUR/USD last week, while the decline in net-short position could be a function of profit-taking behavior as the exchange rate extends the series of lower highs and lows from last week.

With that said, the rebound from the August low (1.1664) may turn out to be a correction in the broader trend as the exchange rate trades to fresh yearly lows in the second half of 2021, and the Federal Open Market Committee (FOMC) rate decision may the exchange rate under pressure if the central bank starts to taper its purchases of Treasury securities and mortgage backed securities (MBS).

 

EUR/USD RATE DAILY CHART

Image of EUR/USD rate daily chart

Source: Trading View

  • Keep in mind, EUR/USD sits below the 200-Day SMA (1.1987) for the first time since April as the advance from the March low (1.1704) failed to produce a test of the January high (1.2350), with the exchange rate trading to a fresh yearly low (1.1664) in August as the 50-Day SMA (1.1791) established a negative slope.
  • As a result, the advance from the August low (1.1664) may continue to unravel following the failed attempt to clear the July high (1.1909), but need a break/close below the Fibonacci overlap around 1.1670 (78.6% expansion) to 1.1710 (61.8% retracement) to open up the 1.1670 (78.6% expansion) to 1.1680 (50% retracement) region.
  • A break of the August low (1.1664) brings the 1.1640 (50% expansion) region on the radar, with the next area of interest coming around 1.1580 (61.8% expansion).

Written by David Song, Currency Strategist, 20 September 2021. DailyFX

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      22,092
    • Total Posts
      92,942
    • Total Members
      42,474
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    scobes2
    Joined 17/05/23 10:51
  • Posts

    • Elliott Wave Analysis TradingLounge Daily Chart, 1 June 23,   Binance coin/U.S.dollar(BNBUSD) BNBUSD Elliott Wave Technical Analysis Function: Follow Trend Mode: Motive Structure: Impulse Position: Wave 5 Direction Next higher Degrees: wave (C) of Motive Details: Wave 5 is equal to Wave 1 at the 298.3 level. Wave Cancel invalid level: 220.0 Binance coin/U.S.dollar(BNBUSD)Trading Strategy: There is still a risk that the price will fall further due to The sub-wave within the wave (C) is incomplete. This corresponds to the price being below the MA200 line, so wait for the wave. (C) Done to join the trend again. Binance Coin/U.S.dollar(BNBUSD)Technical Indicators: The price is below the MA200 indicating a downtrend MACD and RSI are Bearish momentum. TradingLounge Analyst: Kittiampon Somboonsod, CEWA Source : Tradinglounge.com get trial here!   Elliott Wave Analysis TradingLounge 4H Chart, 1 June 23,   Binance coin/U.S.dollar(BNBUSD) BNBUSD Elliott Wave Technical Analysis Function: Follow Trend Mode: Motive Structure: Impulse Position: Wave 5 Direction Next higher Degrees: wave (C) of Motive Details: Wave 5 is equal to Wave 1 at the 298.3 level. Wave Cancel invalid level: 220.0 Binance coin/U.S.dollar(BNBUSD)Trading Strategy: There is still a risk that the price will fall further due to The sub-wave within the wave (C) is incomplete. This corresponds to the price being below the MA200 line, so wait for the wave. (C) Done to join the trend again. Binance Coin/U.S.dollar(BNBUSD)Technical Indicators: The price is below the MA200 indicating a downtrend MACD and RSI are Bearish momentum.
    • 🔸Hello traders, let's review the 4 hour chart for AUDUSD today. Recently price was locked inside distribution trading range and subsequently it broke down below key s/r level near 6600 and hit 6500. Following the normal distribution pattern. 🔸Short-term expecting throwback to re-test mid of the distribution range and then expecting new wave of short-selling once we trigger 6700. Bears still maintain strategic control. 🔸Recommended strategy for AUDUSD bears: wait for the short-term bounce to complete near 6700 and then re-enter on SELL SIDE. TP1 bears +200 pips TP2 bears final +400 pips at 6350. Keep in mind this is a swing trade setup so will take more time to complete. good luck! 🎁Please hit the like button and 🎁Leave a comment! RISK DISCLAIMER: Trading Futures , Forex, CFDs and Stocks involves a risk of loss. Please consider carefully if such trading is appropriate for you. Past performance is not indicative of future results. Always limit your leverage and use tight stop loss.  
    • Analog Devices Inc., Elliott Wave Technical Analysis Analog Devices Inc., (ADI:NASDAQ): Daily Chart, 31 May 23, ADI Stock Market Analysis: We reacted higher off equality of C vs. A as expected and we seem to be wanting to continue higher.   ADI Elliott Wave Count: Wave C of (2). ADI Technical Indicators: Above 200EMA. ADI Trading Strategy: Looking for further upside into wave 1 to resume upside, we will have additional confirmation once we break the top of wave B. TradingLounge Analyst: Alessio Barretta Source : Tradinglounge.com get trial here!       Analog Devices Inc., ADI: 1-hour Chart, 31 May 23, Analog Devices Inc., Elliott Wave Technical Analysis ADI Stock Market Analysis: Looking for a potential five wave move off the lows, e are now expecting a three wave move into wave (ii) to then look for potential longs. ADI Elliott Wave count:  Wave  (i) of {i}. ADI Technical Indicators: 20EMA as support.   ADI Trading Strategy: Looking for a three wave move pullback in wave (ii) before resuming higher.
×
×
  • Create New...