EUR/USD: Weekly Technical Analysis For Jan 26-30, 2014

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Fundamental Analysis:

The broadly weaker euro dropped to fresh 11-year lows against the dollar on Friday one day after the European Central Bank unveiled a large scale asset purchase plan, aimed at boosting slowing growth and inflation in the euro zone.

The euro weakened across the board after ECB President Mario Draghi unveiled a €1.2 trillion quantitative easing program on Thursday. The central bank will purchase €60 billion per month of the region’s bonds, including first-time purchases of government debt, starting in March and continuing until September 2016.

Draghi said the program would help return inflation back to the ECB’s 2% target.

Expectations had been building ahead of the ECB meeting after official figures showed that the annual rate of inflation in the euro area fell into negative territory in December, dropping 0.2%.

Draghi acknowledged the action the ECB took last year was “insufficient” to ward off the threat of deflation.



Technical Analysis:

Weekly bias remains strongly bearish as 21 and 55 Exponential Moving Averages are crossed downward on the 1 hour, 4 hours, Daily, Weekly and Month time-frames. MACD and SSRC oscillator indicator are also signalling more bearish momentum is expected to continue this week. However i suggest a decent retracement and selling the rips to give a better risk to reward. A break of 1.1114 support will bring further surge to 1.1000 and 1.0900 psychological zones.


This week investors will be watching closely at so many fundamental indicators such as EUR Business Ifo Climate, German Prelim CPIm/m, EUR CPI Flash Estimate y/y, USD FOMC Statement/Federal Funds Rate, USD Advance GDP q/q, USD Core Durable Good Orders and USD New Home Sales.


Also take note that there is an ongoing election in Greece, so caution is advised on the Euro pairs.

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