Euro News
With the Covid-19 pandemic continuing to dampen economic activity, inflation levels remain low in the major world economies. This has become an acute problem in the eurozone, with inflation readings falling into negative territory. Headline consumer inflation fell to -0.3% in September, which marked a second straight month of deflation. The reading was the worst since 2016. Core CPI fell from 0.4% to 0.2%. The central bank has slashed interest rates into negative territory and implemented quantitative easing programs in the trillions of euros, but economic activity remains sluggish and inflation continues to fall. No relief is expected anytime soon, with ECB President Lagarde stating last week that inflation “is expected to remain negative over the coming months”.
How will the ECB respond? Policymakers have said they need more data before making any decisions on new stimulus, so a move in October is unlikely. That leaves December has the month to circle in red, when the ECB publishes its economic forecasts, including inflation. This would be a logical time for the ECB likely to increase its EUR 1.35 trillion Pandemic Emergency Purchase Programme. Such a move would likely weaken the euro, since QE increases the money supply.
The new trading week started out positive data out of the eurozone. German and Eurozone Services PMIs were both upwardly revised, with the German PMI adjusted to 50.6 and the Eurozone PMI to 48.0. As well, Eurozone retail sales jumped 4.2% in August, after two straight declines. This easily beat the forecast of 2.4 percent.
Euro/US Dollar Exchange Rate
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Technical Indicators
Overall, the bias in prices is: Upwards.
The projected upper bound is: 1.19.
The projected lower bound is: 1.17.
The projected closing price is: 1.18.
Candlesticks
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum Indicators
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
Stochastic Oscillator
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 79.6567. This is not an overbought or oversold reading. The last signal was a sell 2 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 52.90. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 34 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 71. This is not a topping or bottoming area. The last signal was a buy 5 period(s) ago.
MACD
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 1 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed up 0.000 at 1.179. Volume was 97% below average (consolidating) and Bollinger Bands were 24% narrower than normal.
Open High Low Close Volume 1.178 1.179 1.178 1.179 3,694 Technical Outlook Short Term: Neutral Intermediate Term: Bearish Long Term: Bullish Moving Averages: 10-period 50-period 200-period Close: 1.17 1.18 1.13 Volatility: 7 7 9 Volume: 98,629 99,515 102,227
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
Summary
FOREX EUR= is currently 4.7% above its 200-period moving average and is in an downward trend. Volatility is Our volume indicators reflect volume flowing into and out of EUR= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on EUR= and have had this outlook for the last 23 periods.