EUR/USD : Weekly Technical Analysis For September 22-26, 2014

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Fundamental Analysis:

The Euro fell to fresh lows against the greenback during last weeks trading session after investors digested information that the Federal Reserve is moving closer to raising U.S. interest rates from the last FOMC meeting and Conference held last week Wednesday. The dollar has rallied in the past two months, boosted by expectations for an early hike in U.S. interest rates, while the European Central Bank looks likely to stick to a looser monetary policy stance.

On Wednesday the Fed offered fresh guidance on its plans tighten monetary policy, outlining in more detail how it will start to raise short term interest rates when the time comes. The Fed statement reiterated that it expects rates to remain on hold for a “considerable time”, after its bond purchasing program ends, while Chair Janet Yellen stressed that the timing of any change in interest rates is dependent on the strength of the economic recovery.

The Fed also cut its monthly asset purchase program by another $10 billion, keeping the program on track to finish next month.The euro has remained under pressure against the dollar since the ECB unexpectedly cut rates to record lows across the euro zone earlier this month, and implemented fresh measures in an attempt to shore up inflation in the currency bloc.

On Thursday, euro area lenders borrowed less than expected from the ECB under its new low cost loan program.The ECB said it allotted €82.6 billion to 255 bidders in its new Targeted Long Term Refinancing Operation, or TLTRO. That was well below the €100 to €150 billion predicted by analysts. The low loan uptake indicated that the operation will have only a limited impact on boosting liquidity in the euro area.



Technical Analysis:

Weekly bias remains strongly bearish with 21 and 55 EMA still crossing southward. Also SSRC, OSMA and RSI oscillators are still showing that the strong sell in this pair isn’t just ready to be over. However price is currently in a demand zone on the daily charts, but more decline to 1.26507/1.26604 supports is expected if we get a break of this week.

On the upside, a break of 1.29288 resistance would dampen the bearish bias and bring further rise to 1.29935 resistance. If price successfully penetrates the 1.29935 resistance then we could witness more rise to 1.32191 which could signal the strong bearish trend is about to be over and a strong buy reversal has already built up.


This week, investors would be taking a close look at reports coming from the Euro zone. Firstly, ECB President Draghi will be speaking in the afternoon on Monday. On Tuesday,French and German Flash Manufacturing PMI will be published. On Wednesday, German Ifo Business Climate and US Home Sales will be published as well and finally the week will be closing with the US Core Durable Good Orders which is scheduled to be released on Thursday.

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