Euro advance falters, here’s why
Key Levels, Technical Indicators & Carry
Trade
EUR/JPY
Euro bulls managed to breakthrough the Japanese yen defenses
as the cross made its way above the 138.00 handle during the latest assault
launched by the single currency longs. As euro bulls consolidate their recent
gains, a failure to push above the 138.40, a level marked by the key 78.6 Fib of
the 140.51-130.68 JPY rally will most likely see the Japanese yen bulls
retaliate in force and push the cross below the 138.00 figure and with sustained
momentum seeing the yen bulls take on the euro defenses around 136.73, a level
marked by the 61.8 Fib of the 140.51-130.68 JPY rally. A further collapse of the
euro defenses will most likely see the yen longs make their way toward the
135.57, a 50.0 Fib of the 140.51-130.68 JPY rally and a gateway to the
psychologically important 135.00 handle. Indicators favor the euro longs with
both the momentum indicator and positive MACD reading above the zero line.
Stochastic is treading above the overbought line thus giving the yen longs a
chance to retaliate.
EUR/CHF
Euro longs staged a countermove against the advancing Swiss
Franc longs, but failed to gain momentum above the psychologically important
1.5500 handle and hastily retreated below. As Swssie longs takeover the price
action a sustained move below the 1.5500 handle will most likely see the Swiss
Franc longs push the cross below the 1.5488, a level marked by the 200-day SMA.
A further collapse of the euros defenses will most likely see the Swiss Franc
take on the 1.5440, a 38.2 Fib of the 1.5079-1.5661 EUR rally, a level which is
further reinforced by the large triangle’s lower boundary. Indicators are mixed
with momentum indicator below the zero line, while positive MACD is sloping
downward toward the zero line, with neutral oscillators giving either side
enough room to maneuver.
EUR/GBP
British pound bulls once again lost control over the cross and
hopelessly watched as euro bulls overwhelmed the cable’s defenses as the cross
was pushed against the .6900 handle. As the price action switches gears and euro
bulls consolidate their recent gains, the next move to the downside will most
likely see the pound bulls reassert their dominance and push the cross toward
the .6844, a level marked by the 200-day SMA. A further collapse of the euros
defenses will most likely see the cable longs unwind the single currency
defenses around .6799, a level marked by the 38.2 Fib of the .7106-.6609 GBP
rally. Indicators are favoring the euro longs with both momentum indicator and
positive MACD treading above the zero line, with overbought Stochastic adding
validity to the pound led advance.
Sam Shenker
Sam Shenker is a Technical Currency Analyst for Forex
Capital Markets (FXCM). Sam is the author of the Daily and Weekly Technical
Research reports at FXCM. His reports include: Daily Technicals, Weekly Crosses
and the Weekly Chart Pack. Prior to joining FXCM, Sam spent a number of years on
Wall St trading equities, equity derivatives and futures. He also specialized in
research and analysis of high yield bonds, corporate bankruptcies,
restructurings, reorganizations and venture capital.