x
Breaking News
0

USD Strengthening, Will EUR/USD Fall?

By IFC Markets (Ara Zohrabian)ForexJun 19, 2017 08:14AM ET
www.investing.com/analysis/technical-analysis-eurusd-:-2017-06-19-200195954
USD Strengthening, Will EUR/USD Fall?
By IFC Markets (Ara Zohrabian)   |  Jun 19, 2017 08:14AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

In the current and next years, the Fed is going to raise rates 4 more times
At the previous meeting on June 15, 2017, the US Federal Reserve raised the base interest rate by 25 basis points to 1-1.25%. This contributed to the strengthening of the US dollar. Will the EUR/USD fall?

The Fed confirmed its intention to raise the rate one more time this year and three times in 2018. In addition, the American regulator announced plans to reduce the portfolio of government bonds on its balance sheet in the amount of $4.5 trillion. It involves reducing by $6 billion monthly the reinvestment of maturing Treasury bonds, and by $4 billion- mortgage securities.

These amounts will rise each quarter until they reach $30 billion and $20 billion per month, respectively. Market participants very positively assessed such reduction in the Fed's balance sheet. Note that the ECB, on the contrary, is not going to tighten its monetary policy, refuse to issue euro and raise the rate.

EUR/USD Chart
EUR/USD Chart

On the daily timeframe, EUR/USD: D1 left the rising trend. A downward correction is possible in case of the worsening of economic indicators in the Eurozone and improvement of economic indicators in the USA.

  • The Parabolic indicator gives a bearish signal.
  • The Bollinger bands have narrowed, which indicates low volatility.
  • The RSI indicator is below 50. It has formed double negative divergence.
  • The MACD indicator gives a bearish signal.


The bearish momentum may develop in case EUR/USD falls below the last fractal low at 1.11. This level may serve as an entry point. The initial stop-loss may be placed above the last fractal high, the 7-month maximum and the Parabolic signal at 1.13. After placing the pending order, we shall move the stop to the next fractal high following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point.

More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop level 1.13 without reaching the order at 1.11, we recommend cancelling the position: the market sustains internal changes that were not taken into account.

Summary of technical analysis

Position - Sell
Sell stop - Below 1,11
Stop loss - Above 1,13

USD Strengthening, Will EUR/USD Fall?
 
USD Strengthening, Will EUR/USD Fall?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

 
Are you sure you want to delete this chart?
 
 
Replace the attached chart with a new chart ?
Post
Post also to:
1000
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
 
Replace the attached chart with a new chart ?
Post 1000
Please wait a minute before you try to comment again.
 
 
 
Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Add Chart to Comment
Disclaimer: Fulfilling trading operations under conditions of significant leverage, or relatively little changes of the rate of financial tool (currency pair, index, etc.) can cause significant changes to the customer trading account (proportionally to this leverage) . At movement of the market against the customer position he can incur significant loss of part or the whole deposit. The customer is fully responsible for using his financial resources and choosing the trading strategy. Many financial tools have high volatility and/or have significant intraday time ranges of price changes that define high probability of reception of both fast profits and losses from trading operations.
Continue with Google+
or
Sign up with Email