Trading Forex and CFDs is risky

Weidmann: Low inflation justifies the ECB policy

Market Analysis
Chart_16-06-13_12-07-30

Low inflation and expectations of further easing have been pressuring EURUSD. ECB’s Weidmann commented on inflation earlier today saying that expansionary policy currently justified, as low inflation is not just a consequence of low oil prices, but core inflation is also low. In what looked like comments to defend Draghi’s policy stance to the critical German audience, Weidmann said in Frankurt that “given these muted price prospects and expansionary monetary policy is current appropriate”, although he added that “you can have different opinions on the specific design of the unconventional measures”.

EURUSD has been violating support levels since it turned from the 1405 – 1415 resistance level I Identified in June 7th report. Now the pair is oversold as per Stochastics (7.3.3) in the 4h chart and is trying to retrace some of the recent losses. I expect that this rally will be short lived and the market will turn lower after the buying interest fails. I’m seeing a resistance area between 0.382 and 0.5 Fibonacci retracement levels (1.1300 – 1.1322) while there is a support level at 1.2200 together with further support at 1.1134. This support is significant and has potential to stop the down move and turn EURUSD higher.

I am therefore looking for sell signals at or inside my Sell Area 1.1304 – 1.1323 with Target 1 at 1.1268 – 1.1280 and Target 2 at 1.1230 – 1.1244. Target 3 is at 1.1135 – 1.1285. For those interested in the potential up move to the Sell Area, I’m seeing support between 1.1250 and 1.1260. Please remember that this is not investment advice and that you should not be trading without proper understanding of risk management.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! The next webinar will start in:

Janne Muta

Chief Market Analyst

HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information presented here.