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Monday

EUR/USD

Fundamental: The most important news for the foreign exchange market came before the weekend, when Ben Bernanke officially announced a new round of quantitative easing. The US Dollar fell till the weekend, and has recently begun a rally. QE3 is going to push the USD downwards during the new few months, so the direction of pairs will mostly depend on whether other currencies are depreciating as well or going in the other direction.

The Euro had been appreciating from the past few days as the ECB gave its complete backing to the currency. However, a fall was expected today but did not happen as political tensions between China and Japan caused money to go out from the Yen and into the Euro. Traders should look out for news on Tuesday when the German ZEW Economic Sentiment is released, and on Thursday when we find out about Spanish bond auction, German PPI, Flash PMIs and Consumer Confidence.

Technical:


A regression channel shows that the EUR/USD pair was rising from the past month, and broke out on the 5th of September. Since then it largely followed this angle and broke some resistance levels. However, it has been horizontal from the past 3 days, and fundamental news this week will decide its direction. The closest resistance level is at 1.328, and if the price breaks through this level, we could expect the currency to rally for some time. If the pair falls from its trend line, then the closest support level can be found at 1.300. If the Euro breaks through the support level, then we can expect a fall till the next resistance levels or regression channel lines at 1.275 and 1.269.

If we examine the MACD, we can see that it has been above the 0 mark the whole month, even when it is bearish. Since the 14th of September it has produced a bearish signal, and the price is horizontal. Therefore, we would have to wait for economic news or watch for a break out to take a position.

Stochastics are also bearish, but they have reached the oversold mark. Traders should wait for a bullish signal before executing a trade, as they can remain oversold for a long time.


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