MO EURUSD 11.05.18
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MO EURUSD 11.05.18

Long Term Overview:

Economic Analysis

In recent weeks the market has seen Euro Zone bond yields reassert themselves as a major influencing factor in terms of EUR stability. With ongoing Italian budget negotiations likely to continue to destabilise the EUR in the near term. With recent Brexit negotiations are looking none favourable for the Euro, with a discrepancy between the EU and Britain over Prime Minster May’s post-Brexit immigration plan.

 

The United States and Canadian government have forged a new trade agreement to replace Nafta, preserving President Trump’s ability to impose a 25 percent global tariffs on auto parts from Canada and Mexico – The USMCA trade deal is set to strengthen the dollar in the mid – long term, as a result of a combination of lower market uncertainty and stabilisation of the continents long standing trading relationships.

 

Strength in the Dollar is forecast to see a further growth after the Federal Reserve implied once again that FOMC Interest Rate policy is likely to remain relatively hawkish; preventing excessive inflation in a firming economic environment. Interest rate normalisation is expected to be in the region of 2.50% to 3.50% which may reinforce overall positivity in the greenback.

 

In the near to medium term continued weakness and instability within the EU and Euro Zone Economy is likely to remain a key supressing factor for the EUR whilst in terms of the USD the federal reserves continued push towards interest rate normalisation, a resolution to the markets concerns regarding Nafta suggests the USD may see strength. This is likely to be especially true should the market see confirmation of a much-improved growth environment within preliminary Q3 GDP growth rate data on the 26th of October. From an Economic stand-point, Price may see a continued drop south in the EURUSD in the medium-long term.

Long Term Analysis

Euro/Dollar bias is short on all three-monthly time frame charts. Price is near its upper bearish tripwire area on the 3Month chart, with price beginning its descent on all Monthly Charts. Price had found a floor at the 1.158 S&R level, where price has since recently broken below. If the EURUSD closes beneath this key area on a monthly time frame, price may see a further drop South to a previous price equilibrium point nearing the 1.0900 area in a couple of months.

 

Decision Point: Close below the 1.1580 S&R level

Long Term Trend: Short

Channel Range: Descending: 3300 pips

Possible Bias: Short

Medium Term Analysis

Bias for the EURUSD is short on the Monthly time frame chart. Looking to the 2 Week chart, this currency pair has closed outside of its upper bearish tripwire area, and below the prior 2week candlestick close. The Current formation of the weekly candlestick shows that price is currently pullback into the EMAs, where price may continue its pullback before seeing a further push to the downside. A Dead Cross has also presented itself on the weekly, increasing the amount of resistance above price. With these factors in mind, the EURUSD may see a continued push from the Sellers to the 1.1200 S&R level area, in the next couple of weeks.

 

Decision Point: Close beneath previous lows nearing 1.1465

Long Term Trend: Short

Channel Range: Descending: 3300 pips

Possible Bias: Short