Euro Pairs Scramble to Fill Weekend Gaps

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Euro Pairs Scramble to Fill Weekend Gaps

Euro pairs such as EUR/USD and EUR/JPY still haven’t closed in on the downward gaps made over the weekend. EUR/USD closed last Friday’s New York session trading at 1.3823 then started Monday’s Tokyo trading session at 1.3764 while EUR/JPY’s Friday close was at 140.72 before opening this week at 139.58.

It’s a common belief among traders that all gaps get filled, but it’s always a question of when this would take place. Other currency pairs that have made significant gaps over the weekend, when Russia announced that it will be deploying troops to Ukraine, have already filled those price gaps when risk appetite picked up in earlier trading.

In particular, AUD/USD has already bounced up to its Friday close of .8930, filling the 30-pip gap from its Monday open of .8900. Similarly, AUD/JPY has pulled up to the 91.00 major psychological resistance, closing in on the downward gap to a Monday open of 90.23.

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Euro Unable to Benefit from EZ Data

The euro was unable to make a strong bounce unlike its other currency peers, as euro zone data printed weaker than expected results earlier this week. Spain and Italy both printed manufacturing PMIs that were below expectations, although the former showed a small improvement in the report.

Only the Spanish unemployment change is set for release from the euro zone today and this might trigger a strong bounce among EUR/JPY, EUR/USD, or EUR/GBP if the actual figure comes in stronger than expected.

At the moment, EUR/USD is still trading inside an ascending triangle formation on its 1-hour and 4-hour time frames. The pair made a fake to the upside on Friday, when US data came in mostly weaker than expected, but has retreated back inside the channel resistance when risk appetite failed to follow through.

Stochastic on the medium-term time frames is headed down, indicating potential losses for the euro as well. However, EUR/USD is closing in on the triangle support and a quick bounce might be enough to fill the gap and trigger another test of 1.3800.

To contact the reporter of the story: Jonathan Millet at jonathanmillet@forexminute.com