Strong Eurozone ESI but EURO still weak


Asian stock markets traded mixed overnight, as a sell off in Chinese bonds spread to stocks amid concerns that the government will make further efforts to reduce leverage in the financial sector. The Nikkei and ASX 200 posted slight gains,  UK100 futures are down as Sterling moves higher and U.S. futures are also in the red.

Narrow ranges prevailed for the most part in early week trading in currency markets. The biggest mover was, once again, the New Zealand dollar, which fell by over 0.5% as markets continue to adjust to the expected policy package of the new coalition government. A risk-off theme gave the yen an underpinning, amid concerns about the situation in Catalonia and speculation about Trump’s choice for the Fed chair also continues, with Powell the front runner. USDJPY ebbed to a two-session low at 113.52. EURUSD, meanwhile, plied a narrow range around 1.1600.

Meanwhile, the EURJPY also posted a 132. 25 high in European Open today, and more precisely on the Industrial Confidence and Economic Sentiment Indicator outcomes. The data were overall positive for European economy, with Eurozone ESI economic confidence much stronger than expected at 114.0, up from 113.1 in the previous month and Industrial Confidence presented economic expansion with data released at 7.9 from forecast at 7.1

However  despite the good EU data, the EURJPY did not manage to break the Hourly resistance level at 132.30, for three consecutive sessions. If shorter time frame observed such as 30 minutes one, it seems that the pair is moving southwards after the data, providing a selling opportunity since politics seems to be the main driver of Euro again this week. The stochastic in hourly chart is getting lower after the pick up at 89.70

Hence a Short position was taken at 132.24, with targets at Friday’s low at 131.75 (hourly Target) and at 131.55 (4-hour or daily chart). Resistance level has been set at 132.50,which is also the 200-period MA at the 4-hour chart.

The higher time frames such as 4-hour and daily agree with this position since, the pair is still moving on the lower Bollinger Bands pattern since last week.

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Andria Pichidi

Market Analyst


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