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EURUSD breaks key level and looks weak

Market Analysis
2016-12-09_09-50-38

EURUSD, Daily               

The euro eked out a fresh low versus the dollar while yen edged out a new low as most stock markets in Asia picked up the risk-on vibe imparted by the ECB’s announcement of a net increase in stimulus. EURUSD posted a four-day low at 1.0589 in Asian trade before settling to a narrow range in the low 1.06s. USDJPY logged a four-session peat at 114.56, nearing the 114.82 10-month peak seen on November 30. Yen crosses were also firmer today, pointing to a generally soft tone in the Japanese currency. Elsewhere, USDCAD consolidated above the two-month high of yesterday, despite a second day of gains in oil prices. AUDUSD oscillated around 0.7450, holding well within yesterday’s range.  European Stock markets, which rallied in the wake of the ECB announcement yesterday, are mixed, with the DAX down -0.11%, against a gain of 0.11% in the French CAC 40 and a rise of 0.13% in the FTSE 100. Eurozone peripherals, which outperformed yesterday, are underperforming and the Italian MIB is down nearly 1%.

The EURUSD closed significantly below the key 20 DMA last night and a SHORT position was opened at 1.0620. There could be some consolidation around this key level, as the Parabolic SAR remains positive and the Bollinger bands are compressing.  Target 1 is 1.0550 and then a retest of recent low at 1.0503 and Target 2 1.0500. Thereafter, next support appears at 1.0160, parity 1.000 and 0.9880.  The MACD, RSI and OBV are all suggesting more weakness ahead.

 

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Stuart Cowell

Market Analyst

HotForex

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