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EURUSD: bears aim to rekindle downward movement

On Tuesday, March 17, trading on the EURUSD pair was down at the close. The fall of the pair accelerated after the breakout from the level at 1.11. The level of 1.1060 also did nothing to stop the euro from weakening. The USD strengthened on all fronts, leaving no chance for a rebound. This came on the back of news that US Treasury Secretary Steven Mnuchin presented a package of measures worth $850bn. USD to Republican senators to help stimulate the economy.

At the end of the day, major US stock indexes rose from 5.2% to 6.2%. The S&P500 closed at 2529.19. The EURUSD pair fell to 1.0955.

Today’s news (GMT+3):                                       

  • 13:00 Eurozone: Consumer Price Index (MoM) (Feb), Trade Balance s.a. (Jan).
  • 15:30 Canada: BoC Consumer Price Index Core (YoY) (Feb).
  • 15:30 USA: Housing Starts (MoM) (Feb), Building Permits Change (Feb).
  • 17:30 USA: EIA Crude Oil Stocks Change (Mar 13).

Current situation:

On Tuesday, bears sold the euro at 1.1055. Bulls were not ready to meet them at this price, and so refused to buy back the proposed euros. As a result, the price went into the off-peak zone, below the D3 line. The price rebounded, but only recovered to 1.1045.

Today, futures for US indices dipped into negative territory by 3.5%. Yields on 10-year US bonds also fell 5%, to 1.028. The situation is ambiguous, since the USD continues to weaken due to a decrease in profitability, and technical analysis on the hourly TF indicates a continued decline to the level of 1.0900 or 1.0870.

There is no “bullish” divergence between AO and the current price and so therefore, bears dominate the market. Considering that yesterday, the price fell into the off-peak zone and is now being traded at the D3 line, the flat can drag on until it meets the balance line (Lb). I do not have a current forecast to work off, so I'll reserve judgement until after the opening of the American session.

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