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The crab side of Mr. Euro… until ECB rate decisions?


Jun.04.2014

The pick of the day is Mr. Euro  as he dances against Ms. USA. EUR/USD pair has been dancing on a downward path with a steady rhythm for the past month, but has now come to rest in a zone of consolidation; i.e. he pair has decided to dance sideways like our good buddy Mr. crab. Which still dancing below the Ichimoku cloud, The pair is bounded by its 200 DMA and the support that has been established in the 1.3586 region.

One more reason we are covering Mr. Euro is the upcoming hot economic event that almost every trader has been waiting for… the ECB interest rate decision! Will they ease? Will Draghi disappoint? Will it be a bloodbath for the euro?

Governor Draghi has already hinted that the ECB would be ready to ease if inflation forecasts are weak. After all, the euro zone is facing the prospect of deflation, as weaker price pressures could wind up hurting domestic demand

Many analysts are anticipating measures that look likely to be taken by the European Central Bank designed to raise inflation, which is seen as dangerously low in the Euro area. These measures could include a further reduction on the core interest rate; a form of Quantitative Easing (QE) where the ECB would effectively print money in order to stimulate spending; or a reduction of the overnight deposit rate, the amount that banks are paid for deposits with the ECB, into negative territory.

This hot event will take place tomorrow (Thursday June 5th) after the regular monthly ECB governing council meeting.

We are currently looking at short positions below 1.378 with targets @ 1.345 & 1.33 in extension. Alternative scenario would be above 1.378  for further upside with 1.4 & 1.4245 as targets.
EURUSD daily technical analysis ichimoku RSI DMA
Earlier this week the inflation figure for the Eurozone on a year by year basis was reported. It came in at 0.5% as against an expected figure of 0.7%, already too low for the Central Bank’s liking. So why did this development not cause the Euro to weaken further? After all, low inflation is the reason the easing measures are being considered.

Risks around the ECB announcement Thursday

The answer to that question points to the risks associated with the scheduled announcement tomorrow: The fear is that all possible easing measures have been priced in. This means that the large institutions that move the market have gone short on all the euros for which they have an appetite, and there are no more sellers of consequence left. The ultimate outcome of all this could be that if the ECB does not take the most stringent measures to stimulate tomorrow, these entities will unwind their positions, and the Euro could actually surge upward as a result.

Long term traders. Don’t sweat the small losses and look at the big picture. Short term traders, invest responsibly. And wait, are we hooked up on the social media? To get the most recent intraday updates, don’t forget to follow Invest Diva on Twitter and Facebook.

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Intraday Forex Technical Levels

EUR/USD Intraday: bullish bias above 1.3585

Invest Diva likes: Long positions above 1.3585 with targets @ 1.363 & 1.365 in extension.

If pair goes nuts: Below 1.3585 look for further downside with 1.3555 & 1.351 as targets.

What’s up on the dance floor: The pair is rebounding above its support as the RSI is well directed?

Supports and resistances:
1.367
1.365
1.363
1.3623 Last
1.3585
1.3555
1.351

GBP/USD Intraday: rebound.

Invest Diva likes: Long positions above 1.67 with targets @ 1.678 & 1.682 in extension.

If pair goes nuts: Below 1.67 look for further downside with 1.666 & 1.662 as targets.

What’s up on the dance floor: The pair is rebounding and is approaching its previous top.

Supports and resistances:
1.685
1.682
1.678
1.6759 Last
1.67
1.666
1.662

USD/JPY Intraday: the upside prevails.

Invest Diva likes: Long positions above 102.45 with targets @ 102.8 & 103.1 in extension.

If pair goes nuts: Below 102.45 look for further downside with 102.25 & 102 as targets.

What’s up on the dance floor: The pair has validated a bullish flag and remains within a bullish channel.

Supports and resistances:
103.45
103.1
102.8
102.63 Last
102.45
102.25
102

USD/CHF Intraday: under pressure.

Invest Diva likes: Short positions below 0.898 with targets @ 0.8955 & 0.8935 in extension.

If pair goes nuts: Above 0.898 look for further upside with 0.8995 & 0.901 as targets.

What’s up on the dance floor: The pair stands below its resistance and remains under pressure.

Supports and resistances:
0.901
0.8995
0.898
0.896 Last
0.8955
0.8935
0.892

 

NZD/USD Intraday: the downside prevails.

Invest Diva likes: Short positions below 0.8475 with targets @ 0.84 & 0.835 in extension.

If pair goes nuts: Above 0.8475 look for further upside with 0.85 & 0.8515 as targets.

What’s up on the dance floor: A break below 0.84 would trigger a drop towards 0.835. The 0.8475 former support is now acting as a resistance (polarity principle).

Supports and resistances:
0.8515
0.85
0.8475
0.8414 Last
0.84
0.835
0.8275

 

AUD/USD Intraday: under pressure.

Invest Diva likes: Short positions below 0.929 with targets @ 0.923 & 0.9205 in extension.

If pair goes nuts: Above 0.929 look for further upside with 0.9315 & 0.933 as targets.

What’s up on the dance floor: As long as 0.929 is resistance, look for choppy price action with a bearish bias. The pair has struck against the pivot at 0.9290 but remains on the downside.

Supports and resistances:
0.933
0.9315
0.929
0.9274 Last
0.923
0.9205
0.9165

 

USD/CAD Intraday: watch 1.094.

Invest Diva likes: Long positions above 1.09 with targets @ 1.094 & 1.096 in extension.

If pair goes nuts: Below 1.09 look for further downside with 1.0865 & 1.0845 as targets.

What’s up on the dance floor: The RSI calls for a new upleg. The pair is supported by its ascending 50-period moving average (in blue).

Supports and resistances:
1.099
1.096
1.094
1.0927 Last
1.09
1.0865
1.0845

 

Daily US Index Levels

S&P500 

Long positions above 1914 with targets @ 1926 & 1932 in extension.

Alternative scenario: Below 1914 look for further downside with 1904 & 1894 as targets.

 

Dow Jones

Long positions above 16630 with targets @ 16770 & 16870 in extension.

Alternative scenario: Below 16630 look for further downside with 16560 & 16465 as targets.

 

Nasdaq 100 

Long positions above 3706 with targets @ 3745 & 3765 in extension.

Alternative scenario: Below 3706 look for further downside with 3688 & 3660 as targets.

 

Russell 2000

Long positions above 1116 with targets @ 1129 & 1137 in extension.

Alternative scenario: Below 1116 look for further downside with 1109 & 1100 as targets.

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