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EURO perked up against JPY & GBP

Market Analysis


European stock markets are mostly slightly down, with the GER30 swinging between gains and losses as the EUR hovers around the 1.18 mark against the USD. The UK100 is underperforming slightly, initially weighed down by a stronger pound, although the currency pared some of its earlier losses after comments from Brexit Secretary Davis suggesting an ongoing standoff in talks with th EU. MIB and IBEX have suffered most from the fresh bout of caution in stock markets. Risk appetite still held up in Asian and the Nikkei closed with a gain of 0.20%. The Hang Seng outperformed with banks underpinned by optimism over new shareholding rules. The positive sentiment in Asia petered out though during the European session and U.S. stock futures are mostly down.

Prior Brexit Secretary Davis statement that weighed on pound against the common currency, early today Eurozone account surplus data along with ECB President Draghi statement of a robust recovery of economy, weakened euro and gave further strength to pound. Hence EURGBP rose up to 0.8953 on Davis speech, however as observed in 30M charts this action ran immediately out of steam, with pair returning down to the hourly resistance at 0.8930 area. The reversal downwards again had been expected after euro weakness seen since Wednesday.

Meanwhile momentum indicators present mixed picture, with Daily Stochastic looking overbought with a slope pointing down and below 80, and 4 -hour one to be oversold at 27. However in shorter time frame such as the hourly chart,  Stochastic is at 67 turning lower, while MACD lines bottoming negatively. Hence with pair still trading in a down channel, a Short position was taken in an hourly basis at 0.8936 ( after pair return back to 200-period MA in 30Minutes chart), with Target at 0.8910  and  at 200-hours MA and confluence of 50-Day MA at  0.8887. Support was set at 0.8975.

Another intra day entry was taken in EURJPY at 132.85, which was triggered by the lower high fractal in the hourly chart, and the failure of breaking the 20-period MA. The pair is moving i a down channel since Wednesday as well. The RSI is neutral at 44, while stochastic is at 36 pointing lower. Target was set below the recent low fractal and at 200-period MA, at 132.55. Support was set at 133.15.

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Andria Pichidi

Market Analyst


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