It has been a wild U.S. session, with the indices setting the tone for heightened investor anxiety. The DJIA and S&P 500 have been on a rollercoaster, posting tremendous daily ranges. Values across the forex have remained relatively stable in the midst of the action. In addition, cryptocurrencies have posted a mild recovery from what has been a terrible month to open 2018.
Breaking news out of Taiwan regarding a 6.1 magnitude earthquake is hitting the wires. The financial fallout is likely to be limited to the Hang Seng and Shenzhen exchanges upon their daily open. Here are several events slated for the U.S. overnight that may sway the forex majors:
New Zealand Employment metrics (Q4)
Australia AiG Construction Performance Index (Jan.)
Japan Coincident Index (Dec.)
Germany 10y Bond Auction
This evening’s economic reports are not primary market movers. However, the financial environment is supercharged and any stimulus may bolster participation levels substantially. The 10-year Bond Auction in Germany has the potential to influence Euro valuations, as investors will be looking for clues to the future of ECB commitments to relaxed monetary policy.
After almost two weeks, the EUR/USD has finally departed from the 1.2500 – 1.2400 zone.
Formidable support is present near the 1.2300 handle. In the event that price tests these levels, a long position may come into play. Here are the key support levels for the remainder of the U.S. session:
- Support(1): 20 Day EMA, 1.2301
- Support(2): Bollinger MP, 1.2269
- Support(3): Daily SMA, 1.2195
Bottom Line: The recent consolidation pattern in the EUR/USD appears to be coming to an end and going long from the defined support area may be a profitable way to join the long-term trend. A buy from the 20 Day EMA at 1.2305 with an initial stop at 1.2274 yields 30 pips using a 1:1 R/R management plan.
The markets are active, so be aware of breaking news items and have risk properly defined.