Tag Archives: EUR/USD

Alex Kazmarck of Trade Leader SpotEuro presents analysis of the EUR/USD.


The euro has traded lower during the past two weeks, falling below 1.37 on Friday. The economic schedule this week is light, which would normally lead to less volatile sessions, but with Eastern Ukraine making noise in the geo-political sphere, capturing and barricading in government buildings in protest of the new government, we could see some big moves if America and EU begin to discuss more economic sanctions on Russia. Given the large natural gas reserves and pricing control, Europe is reliant on a good relationship with Russia, so I think it will be unlikely that Europe will rush to support any major economic sanctions. The story that will drive the EUR/USD pair this week will most likely continue to be prospects of QE within the EU with inflation figures from France on Thursday and Germany on Friday. Also, I’m paying close attention to FOMC meeting minutes (Thursday), US PPI figures out on Friday, and G20 meetings Thursday and Friday.


The EUR/USD is entering dangerous territory. It hasn’t been able to break above 1.3900 with conviction and has traded back to the 1.3700 level, a very important support level. If the pair breaks below Friday’s low of 1.3673 it could very well continue dropping to the 1.3600 figure with 200 day MA providing good support near the 1.3550 zone. Resistance should come near the 50% retracement level of 1.3810, measuring from March pivot high to Friday’s low.

EUR/USD daily chart - click to enlarge


While I’ve been discussing the prospects for a euro short for some time now, we could see another bounce from 1.3700 and a test of 1.40+ if deflationary fears are eased with higher CPI and PPI figures. ECB VP Constancio said that inflationary figures will improve in April as Easter holiday travels should boost consumption. While there is a lack of confirmation in any direction, fundamentally the US is further ahead in the recovery process and inflationary outlook favors the US Dollar.

Alex Kazmarck of Trade Leader SpotEuro presents analysis of the EUR/USD.

The euro’s lack of momentum above the 1.39 level has left a lot of traders consolidating their positions. There remain a lot of uncertainties that could put pressure on risk-on strategies and ECB President Draghi’s comments on Tuesday that the ECB is paying close attention to the exchange rate level drove the EUR/USD pair to test the 1.3750 level.  Draghi also mentioned that the exchange rate plays an important role in inflation figures while at the same time saying that the rate isn’t a policy target. Perhaps this confused some traders as the pair bounced back following a 50 pip plunge and almost recovered to its opening price of 1.3840. Comments from Bundesbank President Weidmann also put downside pressure on the euro as he, along with other officials, have raised concerns over the worryingly low level of inflation in the euro zone, which increased the prospect of a large-scale asset purchases as Weidmann said that such an option is not ruled out. Currently down 33 pips, trading at 1.3793 early Wednesday in NY.

EUR/USD daily chart - click to enlarge


Not much has changed in my technical analysis. The fact that the EUR/USD pair is trading below 1.3800, which is the top of the left shoulder in the “Head/Shoulders formation”, a break below 1.3700 should confirm downwards movement and I expect momentum to pick up and lead price to test 1.3600 in the coming days. As mentioned in the last update, the break below the upwards sloping channel from January to March remains valid and supports further downside euro weakness. Two important levels remain for the euro at this time, if it has any chance of reaching and breaking 1.40: the 1.3876 pivot high on the 21st of March and 1.3967 high on the 13th of March.


While the euro remains within a reliable 500 pip range, between 1.3500 and 1.4000 for the last five months, a break of either top or bottom figure will most likely be sustained in the coming months. As mentioned earlier, there still remains a lot of uncertainty. Yesterday, President Draghi said that the Euro-area crisis is not over and I believe him. Europe is much more intertwined with Russia than America and while sanctions will hurt both economies, instability within Ukraine could prove more harmful to Europe than Russia. Expect more of the same for the time being: uncertainty and volatility.

Short term resistance – 1.3850-1.3900/1.4000

Short term support – 1.3750-1.3650

Trade Leader Alex Kazmarck of SpotEuro presents analysis of the EUR/USD:


The euro remained elevated above the 1.3900 level following the Crimean referendum and sanctions imposed by the US on the Russian political and business people closely connected to the Russian government. While most of this was expected, I think the market reacted positively mostly due to the fact Russia did not invade Eastern Ukraine, where people have been rallying against the newly formed Ukrainian government. I anticipate neither the Russians nor the American/EU leaders settling on this issue for some time so I think it’s worth paying close attention to what occurs as the market will be ready to react negatively on any news of a Russian invasion or annexation of Eastern Ukraine.

Technicals and Fundamentals

While the EUR/USD pair was able to break and close above the 1.3900 level, it has failed to gain momentum, mostly due to a risk-off environment centered on the geo-political conflict in Ukraine. Any positive solution should open more room to the upside and a break of 1.40 will most likely give the bulls a clear run for 1.42-1.45 levels. ECB President Draghi has been on the wires last week curtailing the euro’s upside since the stronger euro make it more difficult to stimulate inflation. There are plenty of risks that remain, including China’s slowdown and its shadow banking system which is beginning to show its cracks with the string of corporate bankruptcy filings over the last few weeks.

Currently trading at 1.3925, a 38% retracement of the latest leg higher that started on the 3rd of February brings us to support at 1.3800. A deeper retracement below 1.3700 could be a stronger sign of momentum waning and I would expect a correction back towards the supporting trend line of 1.3500 (from Summer of 2012 lows extending to the lows set at the end of January and early February of 2014).


There are several factors that are relevant to EUR/USD price action in the near term: ECB and Draghi’s stance on the higher euro, the Ukrainian conflict and the level of uncertainty involved, and the Fed’s tapering of the QE program. The latter has been priced in with expectations of taper to continue and Draghi’s content on verbally intervening when the euro pushes into the 1.40 figure. Economic data will be important to watch for signs of inflation as the latest EU data could be a one-off. Worse economic data will push for more action from the ECB and the Fed may possibly surprise the market with a pause to get a reading of consistency within the US recovery.  There is a lot to process so guidance from these events will be crucial for the next push.

Short term resistance – 1.1.3970-1.400

Short term support – 1.3830-1.3900


Today’s ECB press conference featuring President Draghi disappointed all the euro shorts as the EUR/USD pair traded higher by 80 pips. Draghi maintained the low interest rate policy; however, the market expected announcement of SMP sterilization in order to incite inflation. This did not occur, and with the recent pull out of Russian forces within Crimea region, all markets have been in “risk-on” mode with the dollar index slipping below the 80 level.

Euro Update and Outlook

The recent events in Ukraine and the Crimea region had brought instability to the markets, mostly affecting the Russian markets with the equity index losing an astounding 10% of value in one day, most since the 2008 crisis. The dollar and the yen acted as safe havens and many thought the risk-off would last longer than one to two days; with Russia pulling troops out of the Crimea region and with the recent news from Crimea Parliament voting to become part of Russia, it’s uncertain how events will unfold as the US and EU have threatened Russia with sanctions, surely to go unnoticed by President Putin. At this time, I expect the euro being affected by geopolitics only if actions are escalated by both sides. With the pair trading above 1.3830 at this time, it looks poised to close above the 1.3800 figure and may reach December 27th high of 1.3893.



Last few times I wrote about this currency pair, I kept mentioning the importance of closing above 1.3800. While this is important as it will be the break of important resistance, there is another important level of 1.3900, which marks the downward sloping trend-line from 2008 high of 1.60 to the high of 2011 just under the 1.50 level and the 62% retracement of the leg lower from 2011 high to 2012 low. Coincidently, the dollar index has reached an important low with the upward sloping trend-line from 2011 low of 72.67 to 2013 low of 78.71 with current support at 79.70. If the market holds current momentum, it looks clear to break both of these levels.

A failure to move higher could pressure euro bulls and lead to profit taking ahead of Friday’s data. Expect range trading between 1.3820-1.3860 until then.

eur 5 year


With the release of employment data less than 24 hours away, we must continue to see how the markets react to the data. I expect a better than expected figure to support the USD as it will give traders more reasons to think the Fed will continue on its quest to taper the QE purchases. If the figures are released worse than expected, many will think that a pause in tapering will occur for the Fed to analyze more data ahead of altering policy.

eurusd daily

Short term resistance – 1.3900

Short term support – 1.3750-1.3800

Looking for momentum to pick up on a break of 1.3900-1.4000


Alex Kazmarck of Trade Leader SpotEuro presents analysis of the EUR/USD


Bullish price action has set the tone over the past few weeks, with the euro rising above the 1.3700 figure but yet to break the 1.3800 level of resistance. At this time it’s too early to call for a specific direction; however, I favor the downside as the emerging markets story will surely come back into the picture in the coming weeks, if not days. This should favor the USD for its safe haven status along with the yen.

Euro Update and Outlook

While I’ve been disappointed to not see follow-through after January’s drop below 1.3500, I’m more cognizant of the sustainable break above the 1.3700 level. As mentioned before, the 1.3800 is the big figure that needs to be broken before I take a turn and take a neutral stance on the pair. If this occurs, I will be looking for failure and a risk-off scenario to once again sell the EUR/USD pair.

It may be time for consolidation somewhere between the 1.3500-1.3800 level while the market takes a backseat role and waits for Fed Chairman Janet Yellen to provide an updated outlook on the US economy as well as guidance on monetary policy, specifically looking for more information on the recent slump in payrolls as extreme weather has been cited as the culprit. The most recent Fed Minutes that were released earlier this week made note of a change in guidance away from the unemployment rate – perhaps taking the first steps towards qualitative measures. My expectations are for the Fed to continue tapering instead of pausing as members have stated numerous times that QE could always be adjusted upwards to accommodate for negative developments.


On the tech side, the 1.3800 remains the key figure to break before momentum strategies take the pair to the 1.40 level. This could potentially drive the market higher and test the 1.4250 level.  I still believe this is unlikely and this topping formation is just one daily candle away from rolling over and beginning a move towards 1.30 and below. The 1.38 figure is important as it marks the 62% retracement level of the 2011 highs -2012 lows and has been tested numerous times in the last 6 months without being able to close higher; the 1.4250 level noted earlier marks the 76.4% retracement of the same period. To the downside, a break below 1.3500 should give shorts a fresh start and momentum players will join in on the run lower. Depending on the strength of the drop, I will look at 1.33 as the first consolidation level.

The Next Few Days

If the 1.3800 level is broken, it will be important we have a daily close above the figure. More likely than not, we’ll see consolidation and I expect the dollar to weaken only if economic data continues to underperform. While weather may be used as the reason for the temporary lackluster performance, it will take a few more months to confirm this theory; therefore, I expect to see range trading within a more volatile environment. The Group of Twenty Finance Ministers (G20) will be meeting this weekend so there could be some statements relating to the US monetary policy affecting Emerging Markets.

Short term resistance – 1.3750-1.3800

Short term support – 1.3650-1.3500

Looking for momentum to pick up on a break of 1.3500

Trade Leader Alex Kazmarck of SpotEuro gives an update on the Euro:

Emerging markets have shaken things up quite a bit over the last few days. The EM currencies have been sliding and Central Banks stepped in to support their currencies by raising interest rates to fight capital outflows. This activity has been blamed on the US Federal Reserve and its quantitative easing activity and its recently begun tapering program as investor expectations have shifted from a slowing China to a growing US.

Euro Update and Outlook

With liquidity in the euro-zone financial system drying up as the banks have paid back the emergency LTRO loans from 2011 and 2012, euro area CPI remaining below 1% and most notably Germany’s CPI m/m coming in at a -0.6% vs. -0.4% estimated today, the euro is beginning to feel the pressure and has recently continued what seems to be as the next major leg to the downside against the US Dollar. European Central Bank President Mario Draghi has signaled that he is ready to act if needed and with this macro backdrop occurring in the emerging markets and the recent equity sell-off, he will most likely act sooner rather than later, further putting pressure on the euro.

As mentioned in my last analysis of the euro, the uptrend from July of 2013 has been broken to the downside following the December ECB meeting. The 1.3500 level is now under pressure and once broken, the next level of support will be 1.3300 and 1.3200, which correspond to the 50% and 62% retracement levels from the July-December 2013 highs. Other technical indicators are pointing to a continuation to the downside but the price action and correlation in other markets (equity, USD index, and gold/silver) are confirming that investors have turned on their ‘risk-off’ investment mentality and will now seek safer alternatives during this time of market correction, which has been spoken about for a long time. There are only a few things that may alter the current course and the Fed pausing its tapering program if economic data disappoints during the next few weeks will be the main catalyst for a potential reversal. Resistance is now between 1.3700 and 1.3730, last weeks’ highs and the 1.3800 level will need to be broken in order to have bullish continuation. At current levels, the risk/reward is favored toward the downside and I suspect momentum picking up.


All daily techs are sliding. MACD has turned negative and is now looking to cross to continue a move lower; RSI has broken below 50 again and is picking up speed; the ‘trend’ oscillator has just crossed lower; notably, the pair trading below the 50 and 100 day EMA with the latter beginning to smooth out and turn lower over the next few days. The 200 day SMA is now at 1.3375 and will most likely be at 1.3400 by the time price reaches that level. At that point I will look for consolidation prior to a break lower.

My thoughts.

Volatility is sure to pick up and I would not suspect the downwards movement to be without any pullbacks. As I continue to see a dollar rally across the board, JPY aside, I am looking to enter on support breaks and pullbacks, while looking for ECB and FOMC guidance to drive the longer term direction. Risk-off price action should continue to drive the markets in the near-term and capitulation may occur given the right sequence of events. Buying the euro on dips could be a dangerous strategy which I will be sure to avoid as the problems that plagued the euro area in 2012 and 2013 could soon return.

Short term resistance – 1.3700-1.3800

Short term support – 1.3500

Looking for momentum to pick up on a break of 1.3500


When I last wrote about my expectations for 2014, I laid out some ideas on where to see the EUR/USD exchange rate during the next few weeks, saying the top will at the 1.38 level. Less than a few hours later, on December 27th, 2013, the euro soared higher by 1.5%, breaking through 1.3800 and almost reaching 1.3900 before closing back below 1.3800; this was due to low liquidity and in this case the wick higher can be ruled out of our analysis. The market remained calm during the final days of 2013 and the rate was not able to close but one pip above the figure. As anticipated in the last analysis, the euro retreated from the highs set in late December to begin trading the first few days down 2.2 per cent.


There was plenty of economic data released out of the Eurozone and the US along with the ECB rate announcement and Draghi’s press conference, along with Non-Farm Payrolls out of the US. While Draghi continued to reiterate the extended period of low rates, low inflation and that all possible instruments will be used if the situation deteriorated, he denied the possibility of the Eurozone slipping into deflation. From these comments, I think inflation within the EZ will remain a very hot topic to follow and any further signs of lower inflationary figures the euro could come under pressure.

The US market was surprised early this morning by the release of weaker than expected non-farm payrolls. While most expected a figure near 200k, a surprising 74k jobs were added with the previous monthly figure revised upwards by 38k. The unemployment rate, however, was much lower than anticipated. The figure came in at 6.7% as opposed to the 7.0% estimated. This mixed bag of news created quite a volatile state during the first few minutes with the USD broadly lower against all of the majors. Some analysts are pointing to weather being a factor for the lower NFP figure while the decline in labor force participation rate contributing to the lower unemployment rate. What’s important is that the next FOMC meeting on January 29-30 will be held without a press conference. If economic data throughout the month continues to underperform, I expect the FOMC to hold QE steady and possibly lower the purchases by another $10 billion during the March 19-20 meeting.

Technical Analysis

With the dollar showing gains during the last 10 days, I think it’s safe to say that we should see some consolidation ahead of further gains. The pair is currently testing support at the lower end of the rising channel (1.3580) with 1.3800 remaining a key figure of resistance. A daily close below 1.3580 should signal a further slide to 1.3400, the 200 day EMA.

Short term resistance should be near 1.3650-1.3705 (currently 1.3442), the latter being previous support that was broken once the rally above 1.3800 failed to hold. I don’t expect gains above 1.3700 at this time and prefer to sell at those levels.

Longer term, I still favor the USD and a break below 1.3400 should confirm this analysis to the 1.300 figure before further consolidation. To the upside, only a break and close above 1.3800 would undermine my position.


Today’s movements have been volatile and another day of trading should provide better analysis of where the market is heading. Still favoring the short EUR/USD trade with the 1.3800 level as playing a key pivotal resistance level. Currently looking for dollar weakness to consolidate previous gains, especially seen on the DXY (dollar index). A break below 1.3580 should provide further selling to the 1.3400 level at which point I expect a break to cause a much larger drop, targeting 1.30-1.3100 level.

Short term resistance – 1.3650-1.3700

Short term support – 1.3580-1.3600

Currensee Trade Leader Alex Kazmarck of SpotEuro LLC presents predictions for 2014... and things are already moving faster than anticipated...

I expect trading ranges into the New Year and the first few days of the new calendar year since most activity will being on the 6th of January since the 2nd and 3rd fall on a Thursday and Friday, not likely to be market movers without some significant catalyst.

Going into 2014, I think traders will continue to debate the US monetary policy and how new Federal Reserve Chairwoman Janet Yellen will manage the QE exit, or perhaps even stay the course (now known as the “new normal”), continuing to support the US economy if data begins to show signs of weakness. Traders will also look closely at growth in both US and Europe, with the latter being a focus of peripheral growth outside of Germany. It’s important to add that economic divergence in Europe will also put pressure on politics as well as the ECB, possibly calling for a weaker euro or a change to ECB’s mandate. Finally, Japan will also be in focus as the BOJ’s 2% inflation target may be difficult to reach and with a looming increase in sales tax from 5% to 8%, some members of the board have expressed concern in the Q3 GDP growth figures. How will the BOJ attempt to reach its inflation target without hampering growth? These are the stories that will likely drive price action during the next 12 months.

Technical Analysis

In the next few weeks, as everyone gets back to their desks and volumes begin to pick up, there are certain levels that I will be monitoring for directional purposes. Taking a look at the EUR/USD, the pair has maintained an upwards trending channel; however, it was not able to break above the 1.3820 high set in late October just before ECB surprised the market with a reduction in the benchmark interest rate. Despite the rally that followed in November and early December, I am still looking for a move lower to 1.3500 before continuing lower to the 1.30s. This view will be negated if the pair breaks higher and closes above the 1.3800 level. To the downside, this view is supported on a close below 1.3600 with next support at 1.3500 and 1.3400. A close below 1.2750 should begin a new down trend.

On the other hand, should the pair close decisively above 1.3800, I will target 1.4250 and 1.4500 as levels of resistance where the pair will likely consolidate. I don’t see much support for this view as Europe continues to lag the US in economic growth and monetary tightening. I will also point out that the current top of 1.3833 is also the 61.8% retracement from 1.4920 high in May of 2011 to the low of 1.2043 set in July of 2012.

I expect the euro to end 2014 between 1.2500 and 1.2800 with 1.20 and 1.38 as the low and high respectively.


Keeping in line with the “new normal”, I find it difficult to believe that the US economy will be able to sustain such growth in both the labor and financial markets in 2014 as it had during 2013 without continued pressure to keep yields low with its current QE purchases and force money into riskier assets. Inflation will be an important figure to watch, especially if the Fed decides to lower interest on excess reserves below zero as this should fuel banks to lend more, fueling consumption. The themes that made headlines in 2013 will continue to be the front runners in 2014 and should be followed closely.

Short term resistance – 1.3750-1.3800

Short term support – 1.3650-1.3600

Alex Kazmarck of Trade Leader SpotEuro presents analysis of the EUR/USD.


The euro has been correcting upwards following the big sell-off that occurred late in October and early November following deflationary data from Europe and the unexpected action from the ECB, which lowered its minimum bid rate. There has even been a mention of negative interest rates, which caused some volatility but most traders have brushed that news aside. Even US economic data has been more or less positive with both employment data and housing figures surprising mostly to the upside but the euro continued to climb higher, reaching the 61.8% retracement from the Oct. 25th high to the November 7th low (the fundamental change I wrote about last time). The EUR/USD pair has now been consolidating during the past 6 days and there have been convergence in both the currency and equity markets as the highs in SP500 are pointing to a top and possible upcoming correction. The most likely scenario to expect is the ECB remaining concerned about the economy and indicating that interest rates will remain low for an extended period of time. Importance will be placed on the ECB press conference and Draghi’s inference to possible negative interest rates and the deflationary economic data, not just in Europe, but even in Germany. Non-Farm Payrolls are on tap the following day and if the figures are better than expected we could see risk aversion take place as tapering of Quantitative Easing by the Federal Reserve will outweigh the positive news (equity markets will fall and the USD will act as a safe haven, along with the JPY).


The bearish analysis remains constructive as the EUR/USD pair remained below the upwards sloping trend line and below the 62.8% retracement level of the earlier mentioned drop that started in late October. While the bearish picture is intact, we must remain aware that if Non-Farm Payrolls come in weaker than expected, the markets will once again assume that tapering will be pushed further out into the future and we should expect a decline in the US dollar.

Currently, looking at a head and shoulder formation on the daily chart, with the right shoulder correlating with the 61.8% retracement mentioned earlier. A break above that level could target the 1.38 highs and we’ll have to reanalyze the situation following the ECB and NFP news.

A break below the current channel trend line and most notably below 1.3450 should target the 1.3300 pivot low. A close below that level will lead to 1.3150 and the weekly (in yellow) trend line should act as support for the time being.


Much emphasis must be placed on this ECB meeting and Draghi’s comments on how the ECB will deal with deflationary pressures within Europe. Friday’s US NFP data will also be very important as stronger employment will guide the Federal Reserve into tapering its QE program sooner rather than later. Expecting increased volatility.

The financial markets don’t really like surprises, and forex traders certainly got one on Thursday when the ECB cut rates, seemingly out of nowhere. As the hourly chart below shows, that move cost the euro about $0.02 against the dollar in the immediate reaction.

It is worth noting, however, the EUR/USD had already been showing a bit of weakness even before the ECB came into the equation. The exchange rate was in the process of retracing from its most recent trend high near 1.38. Thursday’s action just extended that move. The question is how the market is going to processes the rate cut and its implications moving forward.

Had we seen EUR/USD steadily working lower bit by bit over the course of a few weeks we could have surmised that the market had anticipated a rate move from the central bank. The chart doesn’t really show that this time, however, so the move was definitely not priced in. That means we need to be on the lookout for whether traders think the situation has shifted.

Conveniently, we have a technical picture which may help us make that judgement in relatively short order. As the weekly chart below shows, EUR/USD has now retraced back to the 20-period moving average. It did the same back in September before turning back up to extend the trend. If nothing else, that is going to get traders looking at the 20-period MA as something akin to trend line support.

Perhaps more significantly, the market is now back in the 1.34 area where it stalled before that September dip low. We can now call that an area of support.

Thus, EUR/USD is doubly at a decision point here. A hold around 1.34 would very likely see at least an attempt to extend the running uptrend. A failure to hold, though, would likely mean that trend is done for the time being. There is further support down around 1.32, but a slip that low would have serious momentum implications.