Keeping A Bearish Bias in EUR/USD, As MAs Continue to Keep It Down
EUR/USD continues to display bearish momentum. It posted some modest gains earlier today as it tested previous support level which has turned into resistance around 1.06650, where buyers failed. The 50 SMA (yellow) also stood at that level, which added further to theresistance zone. So, the price was rejected again and now this pair is heading toward the lows from earlier this month at 1.0615.
The demand for the USD has returned so EUR/USD has been struggling to hold onto gains. Yesterday’s economic numbers from the Eurozone displayed further improvement with flash service PMI jumping into expansion, while manufacturing was marginally down. The Eurozone Zew investor sentiment survey showed improving sentiment and optimism in the economy, with both expectations and current conditions beating estimates.
But, markets are more focused on the FED at the moment and the US economy. Today the economic calendar is light, but later on we have the FOMC minutes from the last FED meeting. The range today is only 40 pips, while the average over for this month has been around 85 pips. So, there is room for the decline to stretch futher to the downside.
The minutes should lead on the hawkish side as the FED raised interest trates back then with the economy showing signs of improvement. But, the positive signs have continued since then, so these minutes are sort of outdated. Meanwhile, FED member Bullard appeared earlier today, making some hakkish comments forr the USD, which are also playing a part as they weigh EUR/USD down.
His projection hasinterest rates reaching 5.375%, which i higher than previously estimated. Although Bullard is a hawk among FOMC members, so markets expect him to make such comments at this moment. EUR/USD is looking increasingly bearish and I think that it will reach 1.05 sooner rather than later. So, we will try to sell retraces higher.
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