Having a great bullish dollar run with the EUR/USD dropping almost three percent last week, March will show if it's only temporarily or a start of a new wave.
Last week we said on a purely technical basis the break below 1.1260 completed a wave-4 triangle for a final push lower in the days ahead in a 5-wave decline to new lows around the 1.0750-1.0800 level. So where do we stand after a week of central bank rate decisions, quantitative easing and non-farm payrolls?
Last Thursday the long awaited ECB meeting and Super Mario Draghi failed to excite the market. Even with upward revisions to GDP for the upcoming years the market believed that these were too optimistic and any EUR/USD gains were short-lived as the price continued lower heading into Friday's non-farm payrolls. The jobs report surprised once again to the upside adding 295,000 new jobs with the unemployment dropping to 5.5%. However, the market ignored (at least on Friday) average wages which remain week with lower than expected growth, as it only focused on bullish dollar numbers.
People are now looking for a rate-rise back in June again from the FOMC. I have seen some people calling for April, but given that the majority of numbers have been weak out of the States and combined with the near-record open short EUR/USD position on the COT report we believe the mighty dollar may be approaching a turning point.
The EUR/USD could remain under pressure as we approach the March 18th FOMC meeting, but with Janet Yellen saying that the Fed's reliance on data releases will decide the rate policy, this weekβs retail sales and PPI numbers may signal the end (temporarily) of this amazing bullish dollar run with the EUR/USD dropping almost 3 percent last week alone.
Expectations are for retail sales to recover from the unexpected drop of January with a 0.5% increase. Whether we beat expectations may ultimately decide the fate of this dollar. If these are combined with the 0.2% increase the market is looking for in Friday's PPI number (which the market looks at as weak), we will be sitting here next week writing that a low has been made in the euro.
Technically the pair is oversold on a daily basis and with the MACD turning bearish last Tuesday there is still room for the pair to trade lower. The next major support comes in around the 1.0760 price zone which would retest the lows from 2003. However, we would not try and catch a falling knife by leaving buy orders in the market as the final move in any trend is often an exaggerated spike, so we would wait for confirmation that a low is in place before confidently calling for what should be a multi-week/month rally.
Looking at the two hourly charts it is clear that with the RSI only just coming out of the oversold area there could be a chance of a small recovery before going lower, but there is certainly no sign that a low is in place yet. Sellers are expected to emerge as we approach the 1.1100 with a further target on the downside in the 1.0503-1.0530 zone. Fifth-waves are ending waves so once this wave completes it will mark the end of a 5-wave decline from May 2014.
Looking at the short-term chart we can see that we are in the wave-4 correction which, although unlikely, could take us up to test 1.100 before the final push lower. With three Fed members talking today, the market will look for any indicators of an early rate-rise and push this Euro to new multi-year lows. But could the numbers at the end of the week be the final nail in this dollar-inspired rally? We will wait to see a 5-wave advance from new lows as confirmation.
Last week we said on a purely technical basis the break below 1.1260 completed a wave-4 triangle for a final push lower in the days ahead in a 5-wave decline to new lows around the 1.0750-1.0800 level. So where do we stand after a week of central bank rate decisions, quantitative easing and non-farm payrolls?
Last Thursday the long awaited ECB meeting and Super Mario Draghi failed to excite the market. Even with upward revisions to GDP for the upcoming years the market believed that these were too optimistic and any EUR/USD gains were short-lived as the price continued lower heading into Friday's non-farm payrolls. The jobs report surprised once again to the upside adding 295,000 new jobs with the unemployment dropping to 5.5%. However, the market ignored (at least on Friday) average wages which remain week with lower than expected growth, as it only focused on bullish dollar numbers.
People are now looking for a rate-rise back in June again from the FOMC. I have seen some people calling for April, but given that the majority of numbers have been weak out of the States and combined with the near-record open short EUR/USD position on the COT report we believe the mighty dollar may be approaching a turning point.
The EUR/USD could remain under pressure as we approach the March 18th FOMC meeting, but with Janet Yellen saying that the Fed's reliance on data releases will decide the rate policy, this weekβs retail sales and PPI numbers may signal the end (temporarily) of this amazing bullish dollar run with the EUR/USD dropping almost 3 percent last week alone.
Expectations are for retail sales to recover from the unexpected drop of January with a 0.5% increase. Whether we beat expectations may ultimately decide the fate of this dollar. If these are combined with the 0.2% increase the market is looking for in Friday's PPI number (which the market looks at as weak), we will be sitting here next week writing that a low has been made in the euro.
Technically the pair is oversold on a daily basis and with the MACD turning bearish last Tuesday there is still room for the pair to trade lower. The next major support comes in around the 1.0760 price zone which would retest the lows from 2003. However, we would not try and catch a falling knife by leaving buy orders in the market as the final move in any trend is often an exaggerated spike, so we would wait for confirmation that a low is in place before confidently calling for what should be a multi-week/month rally.
Looking at the two hourly charts it is clear that with the RSI only just coming out of the oversold area there could be a chance of a small recovery before going lower, but there is certainly no sign that a low is in place yet. Sellers are expected to emerge as we approach the 1.1100 with a further target on the downside in the 1.0503-1.0530 zone. Fifth-waves are ending waves so once this wave completes it will mark the end of a 5-wave decline from May 2014.
Looking at the short-term chart we can see that we are in the wave-4 correction which, although unlikely, could take us up to test 1.100 before the final push lower. With three Fed members talking today, the market will look for any indicators of an early rate-rise and push this Euro to new multi-year lows. But could the numbers at the end of the week be the final nail in this dollar-inspired rally? We will wait to see a 5-wave advance from new lows as confirmation.
This article is written by Matthew Clark who is the owner of
Global Forex Pros.
ABOUT THE AUTHOR: Matthew has been a trader for more than 20 years running FX desks at major banks and retail brokers. He recently started Global Forex Pros as a service for brokers to offer their clients, teaching them to trade in real time as professional traders learn at banks and institutions, giving the retail trader the confidence to trade and increasing volumes for the broker. Matthew has been a trader for more than 20 years running FX desks at major banks and retail brokers. He recently started Global Forex Pros as a service for brokers to offer their clients, teaching them to trade in real-time as professional traders learn at banks and institutions, giving the retail trader the confidence to trade and increasing volumes for the broker.
Brokers Gain Access to TradingView's Platform through TraderEvolution
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now π https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africaβs premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now π https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africaβs premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now π https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
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#fmas #fmas24 #fmevents #networking #finance #africa
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
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#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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