Euro Dollar Trade Idea: EUR-USD Exchange Rate Could Head Lower

Modified: Tuesday, 25 March 2014 08:49 GMT
Written by: Gary Howes

The daily technical forecast from FuturesTechs suggests the euro dollar exchange rate could be due to head lower and trader should position accordingly.

The euro came under pressure on Monday the 24th of March with disappointing PMI data out of the German economy giving reason for investors to withdraw EUR exposure. On Tuesday we see the rate remains in the red despite a broad-based equity market rally.

At this juncture we present the latest trade idea issued by FuturesTechs on EUR-USD:

Short Term Trend: Neutral
Medium Trend: Bullish
Candlestick Chart says: 1.3805-15 is capping upside but we’re not moving lower away from here in the way I would have hoped so the misbehaviour continues.
Profile Charts say: Single Print Vacuum between 1.3806 and 1.3812 from last Thursday’s Profile continues to cap upside for now.
Summary: Will 1.3805-15 continue to cap upside?
Trade Idea: Short below 1.3782, stop above 1.3815, targets 1.3725 and 1.3670. Low Conviction “Keeper”. Trade Date: 21/3/14

More euro sales on the cards?

EURUSD made a flat start to the week, shortly rallied to 1.3825 as French manufacturing and services PMI stepped in the expansion zone in March preliminary reading (according to Markit), and gave back gains on slower German expansion.

Overall Euro-zone PMI announces slowdown in March while the bearish trend (building since Mar 19th) keeps the upside vulnerable.

March 18th CFTC data showed that the speculative long future positions are at highest levels since November 2013.

Commenting on a decidedly more bearish outlook for the euro dollar exchange rate, analyst Ipek Ozkardeskaya at Swissquote Bank says:

"The high volume of speculative longs warns of a EUR-unwind risk in the coming weeks as traders are likely to adjust positions to unexpected shift in Fed expectations. However, there is no reason to precipitate the EUR sales given the mounting tensions in Crimea.

"The EUR demand versus CEE currencies should keep the downside moves moderated. We keep our bearish view as long as 1.3845 (pre-Fed resistance) holds. The first line of support is placed at 1.3752 (Fibonacci 23.6% on Nov-Dec retracement), light option offers wait to be tipped below."