EURUSD parity? Forex Trading Analysis

EURUSD parity? Forex Trading Analysis

The fed really knows how to make the currency pairs “move it, move it” on the forex dance floor, ain’t it? I’m getting many questions about EURUSD parity possibility from Invest Diva followers. Naturally, I decided to conduct yet another  IDDA approach to strategy development for those who are not members of our Invest Diva Facebook community (yet).

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Technical Analysis |EURUSD parity?

After ranging between 1.15 and 1.05 for over 1.5 years, the EUR/USD pair finally broke that damn 105 support level on Wednesday. It then confirmed below it on Thursday’s Sydney session. The pair remains below the Ichimoku cloud across all  time frames, from the monthly chart to the hourly chart.

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To top that off, not only the pair formed a massive bearish engulfing chart pattern across all time frames, the Kumo is moving down across the board too. Now THAT’s bearish! But wait. What about the other points of the IDDA?

Monthly Time-Frame: On the monthly chart, the pair is in the middle of a 16-year-long Saucer Top pattern and is now approaching the 76% Fibonacci retracement level after it broke below the monthly Kumo back in 2014.

Fundamentals | EURUSD parity ?

US Side: The Federal Reserve raised rates for the second time in 10 years on Wednesday, boosting their short-term interest rate target by a quarter point to 0.50 to 0.75 percent. This was practically NBD because everyone was expecting it. The REAL surprise was the FOMC statement, in which the Fed forecast three rate hikes next year, and that it could need to do more! 

They also upgraded their outlook on the US economy and basically said Uncle Sam is gonna have a good time in the coming year.

But wait a second. Didn’t the Fed also say last year, on December 2015, that they are looking to increase interest rates a bunch of times in 2016? And yet they ended up doing it only once? Hmmm … A wise Invest Diva would take all this with a grain of salt, wouldn’t you say?

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EU Side: The US is looking to increase its interest rates even more, while the EU is still in negative rate territory. Also, we might be seeing an “Italeave” (Italy leaving the EU) or a “Frexit” (France leaving the EU). ‘nough said.

Market Sentiment | EURUSD parity?

As of Thursday’s Sydney session, 56% of traders of one of the largest FX brokers in the US are bullish on EURUSD. However, the trading crowd has grown less net-long from yesterday but further long since last week. The combination of current sentiment and recent changes gives a further mixed trading bias. Lookout for more updates for EURUSD market sentiment on our Facebook page.

Trading Strategy | EURUSD parity?

Putting the technical, fundamental and sentimental points of the IDDA approach together, we could consider going for a juicy medium to long-term trade. Please visit out Premium Facebook Group for detailed trading strategies and risk management ideas. 

Here are Invest Diva’s calculations for important approximate levels to keep an eye on:

Support Levels Turning Point Resistance Levels
1.0250 1.0515 1.09
1.0115 1.0750 1.1150

 xoxo

Kiana 喜愛成
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