Jump to content

Euro Straddles 1.1300 Ahead of ECB and Fed Meetings. Will EUR/USD Break Out?


Recommended Posts

EURO STRADDLES 1.1300 AHEAD OF ECB AND FED MEETINGS. WILL EUR/USD BREAK OUT?

Euro Straddles 1.1300 Ahead of ECB and Fed Meetings. Will EUR/USD Break Out?

The Euro has been trading in a narrowing range against the US Dollar as the market awaits a plethora of central bank meetings this week. Where to for EUR/USD?

EURO, EUR/USD, FEDERAL RESERVE, ECB, TANKAN, USD/JPY, PBOC – TALKING POINTS

  • EUR/USD remains trapped in tightening ranges as central banks gear up
  • APAC equities move higher, joined by commodities and associated currencies
  • All eyes on the Fed and the level of hawkishness. Will EUR/USD make a move?

HOW_TO_TRADE_EURUSD

The Euro has seen volatility collapse as traders ponder the outlook for EUR/USD ahead of a very busy week for markets. It has been caught around the 1.13 handle where there are a number of option-expires this week.

20 central banks are scheduled to meet this week to make decisions on monetary policy. This includes the G-10 big guns of the Fed (USD), Swiss National Bank (CHF), Norges Bank (NOK), Bank of England (GBP), European Central Bank (EUR) and Bank of Japan (JPY), in that order.

Currencies might be relatively calm leading up to these meetings. The decision by the Federal Reserve Bank will have the most attention from markets.

Participants and commentators eagerly await to see what action the Fed will take after strong hawkish rhetoric seen since the last Federal Open Market Committee (FOMC) meeting

Earlier today we saw Japanese data that was mixed, but generally positive for risk assets. The Tankan survey is conducted quarterly by the Bank of Japan to measure business conditions.

The Tankan large manufacturing index was a slight miss at 18 instead of 19 but the Tankan non-manufacturing index came in at 9, beating the forecast of 5.

The most positive news came from Japanese core machine orders for the month of October. It came in at 3.8%, above the 1.8% expected. USD/JPY was little changed.

The PBOC weakened the Yuan today at the fix after it made a 3-year high last week. This came after a meeting on the weekend of the Communists Party’s top officials at the Central Economic Work Conference. They signalled toward pro-growth policies in 2022.

These factors have led to a generally rosy start to the week for risk assets. Commodity markets were mostly higher, with soft commodities the only laggards. Iron ore was up over 6% on the both the Singapore Exchange and the Dalian Commodity Exchange.

APAC equity indices were mainly up on the day, with China’s CSI 300 index leading the way, up over 1.5% at one stage.

Looking ahead, there is very little data due out before the central bank meetings get under way this week.

 

EUR/USD TECHNICAL ANALYSIS

EUR/USD has been range bound for close to a month now, caught between 1.11861 and 1.13830.

This sideways price action has seen the short-term simple moving average (SMA) crossed several times. The 10 and 21-day SMAs remain very close to the price.

However, medium and long-term SMAs remain above the market and maintain a negative gradient. This might suggest that near-term momentum is in a state of flux, but that medium and long-term momentum could see bearishness unfold.

Support may lie at the previous lows of 1.11861 and 1.11682. On the topside, resistance could be at previous highs and pivots points of 1.13830, 1.15245, 1.16694 and 1.16922.

EUR/USD CHART

Chart created in TradingView

 

Written by Daniel McCarthy, Strategist for DailyFX.com. 13th December 2021

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
      21,293
    • Total Posts
      90,935
    • Total Members
      41,413
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    blank
    Joined 07/02/23 17:19
  • Posts

    • Look Ahead to 08/02/23: Oil inventories; TTEF, DIS, UBER and BDEV earnings Oil, tech, and the consumer are set to dominate the markets on Wednesday, with earnings from TotalEnergies (TTEF), EIA data, and results from Walt Disney (DIS) and Uber Technologies (UBER). Angeline Ong | Presenter, Analyst and Content Editor, London | Publication date: Tuesday 07 February             
    • 07 February 2023 Spot Gold The price of gold has extended its pullback from overbought territory over the last week and has found some near-term support at the 50-day simple moving average (50MA) (green line). Our preference remains to look for long entry on a bullish price reversal. A bullish reversal might be considered if we can see price closing above the 1875 level, provided that the 50MA is not broken with a price close below. Should the 50MA level be broken and the price reversal not confirm, 1820 becomes the next downside support target from the move. In this scenario we not looking to short gold but would rather be looking for a bullish price reversal closer to this level for long entry once again. Should either of these scenarios manifest we will update our guidance accordingly with resistance targets and stop loss considerations. Source: IG charts       Brent Crude Oil The bearish reversal off the 8770-level guided in our previous note has yielded a significant decline, although fallen short of the 7760-support target. The price now looks to be rebounding from oversold territory. Traders who have been short might consider this an indication to exit their trades. The longer-term trend bias is still considered down and should a bearish price pattern emerge before this level, new short entries might be considered. In this scenario a close above the 8770 level might be used as a stop loss consideration, while targeting a move back towards the support low at 7760 once again. Only on a move / close above the 8770 level would the longer-term trend bias be reassessed, and long trades reconsidered Source: IG charts         Our weekly technical report is compiled by in-house senior market analyst, Shaun Murison.
    • Hi, the basic package has a 15 minute delay.
×
×
  • Create New...