Will the EUR/USD reach the 1.3500 level?

The Euro continues falling today, but at a lower rate as we can see it on the 4 hour chart below of the EUR/USD. The recent fundamental data out of the United States has raised the probabilities of an interest rate hike by the Federal Reserve sooner than anticipated; this has caused the Dollar to gain strength. On the other hand, the European Central Bank has provided more economic stimulus to the Eurozone, causing the Euro to weaken. This is why we are seeing the EUR/USD in a sustained downtrend.

The next support level for the pair is the 1.3500 from where it may stall or try to bounce to the upside. There could be a lot of buy orders pending at that area and that could prevent the pair from going lower. However, if the fundamentals from the U.S. keep coming out better than expected, then the yield on the U.S. treasuries may widen further and cause the greenback to gain more strength. This in return could cause the EUR/USD to break below the 1.3500 level.

The Pound falls, but it stays within the recent range.

The Pound has been retreating versus the Dollar during today’s session as we see it on the daily chart below of the GBP/USD, courtesy of the Forex Broker Activtrades http://www.activtrades.co.uk/. On this same chart we can also see how during the past few days the price has been oscillating around the 1.6800 level, waiting for some type of fundamental reason to move. Today’s fundamentals out of the United Kingdom were mostly in line with expectations, but the GBP/USD still falls on Dollar strength. If the price continues falling, then we should be attentive to a possible visit of the support at the 1.6700 level from where it may bounce to the upside.

A wider look at the EUR/USD.

When a currency pair or any other trading instrument stays in a prolonged consolidation, it is better to move to higher timeframes in order to see the bigger picture. Since the EUR/USD has stayed in a consolidation for so long, we have decided to take a look at the weekly timeframe. On it, we can see that the pair has found a very good support at the zone between the 1.3500 and the 1.3600. We may still see a bounce from this area to the upside, but if the price keeps falling, then the next support is going to be the 200 period Exponential moving average around the 1.3415 level.

Excellent bounce to the downside on the Kiwi from EMAs confluence.

An EMA confluence is an area where two different Exponential Moving Averages are sitting on two different timeframes. For instance, on the image below we can see that the 55 Exponential Moving Average is right on the 0.8550 level on the NZD/USD daily chart. We also see that the 200 Exponential Moving Average on the 4 hour chart is on the same level of the 0.8550. This is what we call an EMA confluence and these zones usually become very good support or resistance areas.

In this case, the EMA confluence has acted a very good resistance zone for the NZD/USD and we can clearly see how the price stopped at that level and bounced to the downside from there. Now the price has come back to the 0.8500 level and it is stalling at that zone. We must be on the lookout for this type of confluences, because they could provide us with very good entry opportunities.

The EUR/USD returns to the 1.3600 zone.

The European Central Bank has cut its interest rates and for the first time in its history, it has implemented negative interest rates during today´s announcement. This is an attempt by the central bank to stimulate the economy and make the inflation levels go up. This is what caused the Euro to drop versus its major counterparts, especially versus the Dollar. But we also see on the daily chart below of the EUR/USD that the price has come back to the levels previous to the news release. Most probably, the market had already priced in the actions by the ECB and probably the Euro does not deserve to be at such low levels.

However, tomorrow we have the Non-Farm Payrolls report out of the United States and if the reading comes out better than expected, then we may see the Dollar strengthening and most probably the Euro will keep losing ground versus the greenback. 

Will the NZD/USD reach the 200 Day Exponential Moving Average?

The Kiwi has continued its fall versus the US Dollar after the greenback gained some strength supported by the better than expected reading on Factory Orders out of the United States. At the moment it seems like the NZD/USD is heading towards the 200 Day Exponential Moving Average just as we see it on the daily chart below, around the 0.8420 level.

The 200 Day EMA could act as a strong support or resistance level and that is why we should be attentive to a possible visit of the price to that zone, because we may get a bounce to the upside from there and may be the opportunity for a possible long entry.

The Pound stays strong versus the Yen and breaks above the 171.00 level.

The Yen has been weakening today versus most of its major counterparts due to the strong Chinese fundamentals and merger and acquisition activity in Japan, which translates into more outflow of capital from the land of the rising sun. China was showing a lot of weakness lately on its economy, but today’s manufacturing reading was the highest it has been in five months. This has caused investors to leave the Yen and search for higher yielding assets.

That is why we see on the 4 hour chart below of the GBP/JPY, courtesy of the Forex Broker Activtrades http://www.activtrades.co.uk/, that the pair has broken the 171.00 level to the upside and it is attacking the 200 period Exponential Moving Average (blue line). From this point on, the best thing to do is to stay patient and wait for confirmation of the breakout and then the pullback to the 171 or 200 EMA for a possible long entry.