(Figure): Daily Chart For EUR/USD
The Currency pair EUR/USD continued to rally downwards as the U.S. economy is headed to diverge against the Eurozone. The currency pair hit 14 month lows on Friday after expectations of a tighter monetary policy from the U.S as compared to a weaker monetary policy in the Eurozone. The U.S Fed announced last week it will be putting a stop to its bond buying program by next month and is on track to increase the benchmark interest rates by 2015, on the other hand ECB is planning to introduce more stimulus to aid the ailing economy.
Looking at Friday’s session the currency pair traded in a range of 1.2826 and 1.2929 and consolidated at 1.2829 with a loss of 0.73%, the Euro has been particularly been on a very strong downtrend against the U.S. dollar, strengthening U.S. economy has driven the demand for the Greenback and failure of the ECB to revive the Eurozone economy has led to the decrease of the Single currency. The Single currency came under pressure on Friday after the ECB stated on Thursday it has allotted 255 bidders a sum of €82.6 billion in its new TLTRO (Targeted long term refinancing operation), the analysts had expected the figure to be around €100- €150 billion.
The currency pair has been on a downward momentum in the last couple of months and has not been able to sustain the upside, the momentum indicators on the single day chart suggest the currency pair has a very strong selling momentum and it may gain positive buying momentum if the currency pair is able to sustain above 1.2950 levels. The relative strength index too has turned upwards from the 30 mark giving healthy buy signals.
Go long on the currency pair with a target of 1.2920 and a stop loss of 1.2825
Traders can short the currency pair with a target of 1.2810 and a stop loss of 1.2929.