WorldWideMarkets Community

Forex Trading, Market News & Technical Analysis

There is reason to think EUR/USD has peaked

Posted by Marge Maresca on Aug 10, 2017 3:35:03 PM

flattire.png

There are signs EUR/USD's August 2 high at 1.1910 will not be bettered before key central bank meetings in September. Interest rates have been moving in opposition to the EUR/USD rally for some time with UST spreads to bunds widening. With traders holding a sizeable long position the bond moves were going to provide significant drag. Choppy trade like that seen since the U.S. jobs data may also be a sign of the end of a trend. With risk aversion spiralling on the back of escalating tensions between North Korea and the United States, those long EUR have good reason to scale back. With most EUR longs in profit, to pare is an easy decision. Another factor that will likely drag on the EUR is the sudden rise of China's yuan. The CNY TWI has jumped 1.2% in 3 days. After the dollar the euro is the largest component of the index and logically will be weighed by such significant gains.There are signs EUR/USD's August 2 high at 1.1910 will not be bettered before key central bank meetings in September. Interest rates have been moving in opposition to the EUR/USD rally for some time with UST spreads to bunds widening. With traders holding a sizeable long position the bond moves were going to provide significant drag. Choppy trade like that seen since the U.S. jobs data may also be a sign of the end of a trend. With risk aversion spiralling on the back of escalating tensions between North Korea and the United States, those long EUR have good reason to scale back. With most EUR longs in profit, to pare is an easy decision. Another factor that will likely drag on the EUR is the sudden rise of China's yuan. The CNY TWI has jumped 1.2% in 3 days. After the dollar the euro is the largest component of the index and logically will be weighed by such significant gains.

Top formation warns of EUR/GBP downside risks
EUR/GBP is looking overbought with technicals starting to point lower with a risk to potentially fall to July 27's 0.8991 low. A hanging man Doji from Aug 8 saw downside follow through Wednesday but a recovery into the close delivered a counter candle stick signal. Candles with long wicks can indicate market indecision but the technical picture is beginning to call EUR/GBP lower. For a bear target the 10-DMA has tracked the market closely the last two weeks and provides a potential tipping point today at 0.9005. A break here could open up a run back to the Aug 3 outside day low at 0.8925 but the 0.8991 low from July 27 is a viable target. The bear view would be negated above Aug 8's 0.9087 trend high but the upper 30-DMA Bollinger stands guard over the market at 0.9096. Chart: http://reut.rs/2fuQmaf   

 

Topics: EURO, eur/gbp

 

Tools & Educational Resources

Forex 101LEARN MORE >>
Learn the basics of Forex and how to practice trading the markets.

GlossaryLEARN MORE >>
Confused by the language? Click here and search for key trading terms.

FAQ CenterLEARN MORE >>
Browse our frequently asked questions and find your answers right away.

VideosLEARN MORE >>
Access to the educational lessons, webinars and platform walkthroughs.

READY TO TRY THE MARKETS?

Get started with a FREE $10,000 Demo Account and experience the Forex Market RISK FREE!