Euro Bearish not Only Against the USD

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Euro Bearish not Only Against the USD

Last week, after the US Jobs report we saw the USD gain across the board, which dragged the EUR/USD further with parity in sight. But its not just the strong USD that makes the parity level very likely, it is also the weak euro. Let’s take a look at the EUR/GBP, EUR/JPY, and EUR/AUD pairs.

EUR/GBP 4H Chart 3/9
eurgbp4h03092015
(click to enlarge)

EUR/GBP has been in a very persistent downtrend. When we look at the 4H chart, we can see that despite choppiness, the pattern of lower highs and lower lows were nearly never broken since February. There has not been huge volatility neither, but rather a slow bleed. In order to shift from the bearish outlook, the conditions below need to be changed.
1) Price is trading below the 50-, 100-, and 200-period SMAs. If price can start holding above even the 50-period SMA, we can start thinking about consolidation/bullish correction.
2) The RSI has held below 60 after tagging 30. This represents maintenance of bearish momentum, and if the RSI is able to push above 60, we can then say that the bearish momentum is lost.

EUR/JPY 4H Chart 3/9
eurjpy4h03092015
(click to enlarge)

The Japanese Yen has been the weakling with the BoJ’s indefinite quantitative and qualitative easing measures (QQE). But, the euro is even weaker than the yen in the medium-term. (It might still be bullish against it in the long-term).

Looking at the 4H chart, we can see that despite a consolidation and bullish correction through February, EUR/JPY was still holding below the cluster of 200-, 100-, and 50-period SMAs. This reflects maintenance of the bearish bias. In March so far, price has started to retreat and is poised to test the 2015-low at 130.13, with likelihood of breaking lower in continuation of the prevailing trend since December 2014.

EUR/AUD 4H Chart 3/9
euraud4h03092015
(click to enlarge)

The Australian Dollar is another weakling. It has been making historic lows against the kiwi in 2015. EUR/UAD has been consistently bearish since the beginning of February. The 4H chart shows a persistent downtrend as price now trades below the 200-, 100-, and 50-period SMAs. The RSI has been tagging 30, and holding below 60, which shows persistent bearish momentum. The pattern of lower highs and lowe1.3788.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.