EUR/USD Daily Analysis: A lot of fundamental events floating around yesterday and today in the FX markets (great for scalpers!), so lets begin yesterday with the Fed announcements. First of all, the interest rate outlook came out hawkish as more Fed members saw a significantly higher (median now sees just below 1.5%) interest rate in 2015 and 2016. That news caused the USD to rally against most other currencies. However, Yellen’s press conference was decidedly more dovish, citing weak CPI/inflation data and a need for the interest rates to remain low for the foreseeable future. Noticeably US stocks did not react as much as the USD did, as one would expect stocks to drop on a higher interest rate outlook. The wildcard in this scenario is the Scotland independence vote, which is ongoing now and which will have polls closed around 10p GMT tonight. While damage will be much more focused on the GBP if a yes vote occurs, a yes vote could introduce another degree of uncertainty into the EU, in effect greasing the technical wheels for further bearish price action.
Technically, which of course encapsulates all of these bearish fundamentals, the pair has been in a strong downtrend since May when the ECB introduced the negative deposit rates and its very dovish forecasts. This manifested itself on the charts as a major drop and then support break at 1.35.
Technically we remain in a medium and long-term bear trend under 1.3115 – the 23.6% retracement of the May-present drop.
Our Preferred Trades*: We continue to look to sell with the trend until we see evidence of a turn-around. We are looking to sell on a rally toward 1.2950 with bearish confirmation, targeting a drop down to 1.29/1.28.
Yesterday’s EUR/USD SwingPRO Signal Result: No trades taken yesterday.
Today’s SwingPRO Signal: Flat on swing trading. See preferred trade above.
*CandlePRO: CandlePRO can be used in conjunction with our daily analysis and “our preferred trades.” For example, if we prefer “going short” or “selling a rally” then we would look for bearish candlestick signals after a rally or near resistance levels. Alternative if we prefer “going long” or “buying a dip” then we would look for bullish candlestick signals on price drops or near support levels.
