EUR/USD Enters Bearish Rotational Phase

Posted Friday, February 23, 2018 by
Shain Vernier • 2 min read

Since Wednesday’s FOMC Minutes release, action has been mixed toward the USD. Initial strength was replaced by weakness, with pricing across the forex now entering consolidation. Compressed ranges in the EUR/USD, USD/CHF, and USD/JPY are illustrations of the neutrality the U.S. session has brought.

During the overnight, CPI numbers out of the Eurozone came in as projected. The only moderate surprise was the Core CPI (MoM) for January, which dropped slightly more than expected.

As I write this, there is a sell signal facing the EUR/USD that has gone live. It is performing well and if you are in on the action, kudos!

EUR/USD Technicals

Compression appears to be the order of the day. This theme is evident in the EUR/USD, which is trading firmly within Thursday’s range.

EUR/USD, Daily Chart

As my FX Leaders colleagues alluded to earlier, there is a double-top formation present from 1.2535 to 1.2554. This is a key area to monitor as we move toward March 1st.

Here are a few numbers to watch for today:

  • Resistance(1): Bollinger MP, 1.2319
  • Resistance(2): 20 Day EMA, 1.2330
  • Resistance(3): Daily SMA, 1.2366
  • Support(1): February Swing Low, 1.2234

Overview: Price stalled out at the 20 Day EMA of 1.2330 and has subsequently reversed. At press time, trade is heavy in the vicinity of the 1.2300 handle. It appears as though traders are happy to settle near this area for the week. The Sunday/Monday session is going to be key for this market. If price remains compressed, a directional move is likely on the way.

Even though the economic calendar is wide open, Monday’s U.S. New Home Sales report may bring some action to the market. As traders clamor for clues on what the FED is going to do March, we may be in a position to make a run at February’s extremes.

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