EUR/USD Weekly Technical Analysis 6 March 2017 – Waiting for News and Data

EUR/USD spot: 1.0615

Support: 1.0574, 1.0552, 1.0492

Resistance: 1.0803, 1.0720, 1.0624

Strategy:

  • Below 1.0624: Bias for short trades with tight stops and initial targets of 1.052 and 1.0492.
  • Above 1.0624: Bias for long trades with tight stops and initial targets of 1.0664 and 1.072.
  • Once the range is broken on either side, larger trades are likely to set-up.

The ECB Rate Decision will Dominate this Week

The EURUSD remained rangebound last week as uncertainty grew. Sentiment is only marginally in favour of USD bulls, but price action appears to indicate the market is long USD.

This week the ECB will announce its rate decision on Thursday and US Non-Farm Payrolls will be released on Friday. The ECB is expected to make no changes to its rate, but the announcement will be accompanied by forecasts for growth and inflation in the Eurozone. A lower than expected NFP number is now the only factor likely to prevent a rate hike by the Fed next week.

Other news the market is watching out for is more clarity on tax cuts, infrastructure spending and budget cuts in the US, as well as the Dutch and French election campaigns.

The Long-Term Chart Remains in a Sideways Range

The weekly chart has traded sideways to slightly lower for the past two years. Volatility has drifted lower as the market tests the lower side of the range. With significant resistance on the upside the more likely break will be to the downside – however, Euro rallies can still take place within this pattern.

2017-03-06-eurusd-weekly-chart

EUR/USD Weekly chart

The market spent much of the past week pushing through the 1.0602 resistance level, but with no follow through. That resistance level has now moved to 1.0624, and is a key pivot level. A decisive move through that level will target 1.0803 but will encounter light resistance at 1.064 and 1.0720 along the way.

Euro Rallies from Oversold Positions are Likely to Continue

Given the overall bias toward USD strength, the market appears to be long dollars, and hence we have seen strong Euro rallies from oversold positions and from support at 1.0492. This is likely to continue until the news flow shifts in support of one currency or the other.

2017-03-06-eurusd-4h-chart

EUR/USD 4-Hour Chart

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