EUSUSD closes higher for the week
IN trading today, the EURUSD moved higher in the Asian session, fell in the European morning session, and is moving higher in the US session.
The move took the price positive on the week (it closed at 1.0636 last Friday). Ironically, last week’s close is right near the midpoint of the week’s trading range. However, this week, the pair have had their share of ups and downs.
- On Monday the price initially moved higher than lower and then back higher
- On Tuesday the pattern was lower than higher.
- On Wednesday after reaching a new high for the week at 1.07592, the price fell all the way down to 1.05147 as Credit Suisse became a catalyst and provided a tailwind. Expectations for a softer ECB were priced in.
- On Thursday the ECB raised rates by a larger than expected 50 basis points. Again, it was aa volatile up, down and back up day. The price closed higher.
- Today, again the price moved up and down and back up again. The final move to the top took the pair to new intraday highs.
Technically, the price rally today has now seen the pair extend above its 100 hourly moving average at 1.06583, and the 61.8% retracement of the week’s trading range at 1.06658.
Today’s catalysts were lower US rates which weakened the US dollar. The two-year yield is now down 30 basis points at 3.831%. The 10-year yield is down 20 basis points to 3.382%. Yesterday the trend in rates was the opposite with US yields moving higher.
what now
The bias is more positive above the 100-hour moving average 1.0658. On the upside, there is a swing area between 1.06908 and 1.0704. Getting above that area would increase the bullish bias.
Alternatively, go back under the 100 hour moving average
Moving average
A moving average is a statistical tool that is used to smooth out short-term fluctuations in data and reveal long-term trends. It is calculated by taking the average of a certain number of data points over a specific period of time, and then plotting that average as a line on a chart. The most common types of moving averages are simple moving averages (SMA) and exponential moving averages (EMA).
A moving average is a statistical tool that is used to smooth out short-term fluctuations in data and reveal long-term trends. It is calculated by taking the average of a certain number of data points over a specific period of time, and then plotting that average as a line on a chart. The most common types of moving averages are simple moving averages (SMA) and exponential moving averages (EMA).
Read this Term and then below the 200-hour moving average 1.06278, and sellers rule again.
Next week the Federal Reserve
Federal Reserve
The Federal Reserve System, more commonly known as the Fed, represents the central banking system of the United States. Like other central banks worldwide, the Fed is responsible for monetary policy, in this case in the United States. The Fed is one of the most watched and followed entities for forex traders, due to its material impact on the US dollar. Originally founded in 1913, the Fed was created to perform a wide range of functions. This includes stabilizing and maintaining a flexible monetary policy in the
The Federal Reserve System, more commonly known as the Fed, represents the central banking system of the United States. Like other central banks worldwide, the Fed is responsible for monetary policy, in this case in the United States. The Fed is one of the most watched and followed entities for forex traders, due to its material impact on the US dollar. Originally founded in 1913, the Fed was created to perform a wide range of functions. This includes stabilizing and maintaining a flexible monetary policy in the
Read this Term will meet and announce their rate decision on Wednesday. They will also release the dot plot on rate expectations.
Currently, the final rate implied by the market is below 5% at 4.95%. Remember in December when the last dot plot was announced, the Fed officials had the final rate at 5.11%. So traders took out one 25 basis point hike from that December. Having said that, a week or two ago, the expectations for the final rate were higher to 5.75%. People were talking about a final rate of 6% or higher.
That’s more convenient of course, but even more convenient is the futures contract for January 2024 now implies that the Fed will lower rates to 3.95%. That’s down about 100 basis points from the final rate.
Before the Fed went into the blackout, comments were about the Fed pushing rates to 5.25% (and for some above), and then rates being constant for an extended period of time (and certainly not before the end of 2023). Now, the market sees the Fed rate moving down by 100 bps.
Wednesday is sure to be an interesting day. The volatility seen this week can certainly be a precursor for what we can expect.
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