EURUSD, Daily
How long can Mr Draghi stay stumm? Eurozone stock markets continue to sell off sharply and Eurozone spreads remain volatile, while Italy’s banking problems are looking ever more threatening. That the Eurozone can escape serious negative implications from the UK is clearly wishful thinking and while central bankers have been eager to hand part of the responsibility for the Eurozone’s economic health back to politicians, it is clear that those in charge on both sides of the channel were simply not prepared for the outcome of the referendum. Nor are they willing to work together in order to limit the fallout of Brexit. So its back to central banks, but while the BoE already moved to free up pressure on UK banks and hinted at further easing over the summer, Draghi has been remarkably absent from the public stage so far. Wait and see remains the order of the day and that may also be because many of the ECB’s options are facing serious challenges. A tweaking of the capital key rule in the QE purchases as suggested by some, would only increase EMU fatigue in Germany and likely face fresh legal challenges. Further deposit rate cuts will add to pressure on banks. A relaxation of state aid rules for banks may be needed in Italy, but could push a finalisation of the banking union out even further. So Draghi may be busy behind the scenes trying to evaluate political and legal risks to more radical steps, but likely will be forced to resort to tweaks and minor changes that will leave markets disappointment.
The risk off rush continues, USDJPY struggling with 100.00, GBPUSD struggling with 130.00 and Gold comfortably north of 1360.
The post Brexit EURUSD rally petered out yesterday and we trade below the 200 DMA, however, with attention now turning to the FOMC minutes later today at 18:00 GMT, the ADP numbers tomorrow and the main event NFP on Friday this could simply be movements ahead of the news. Technically, on the Daily timeframe the support area is down at 1.0930 – 1.0825 and resistance at 1.1160 and 1.1220. My preference would be for SHORT positions from here, dependent on the news flow.
Janne Muta
Chief Market Analyst
If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:
http://www.topforexbrokerscomparison.com
About Janne Muta, HotForex’s Chief Market Analyst
Janne Muta is a seasoned industry professional with over 16 years experience in the global markets. Originally from Finland, Janne has worked for institutions in both Helsinki and London as an institutional fund manager, global market analyst and FX educator.
Traders and fund managers from around the world have benefited greatly from Janne’s technical analysis methods. The indicators and price action based trading models he has developed, have, after rigorous testing, proven to be invaluable in identifying high probability trades.
“My mission is to help you to become a confident and successful trader”
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.