Home » Technical Analysis » Daily » EURUSD » Commodity Currencies Under Pressure Ahead of Key Macro-Economic Events

Commodity Currencies Under Pressure Ahead of Key Macro-Economic Events

The American dollar ended the week mixed against its majors rivals, with investors cached off-guard by the PBoC decision to devalue the Renminbi.

The EUR and the GBP closed the week with gains, but within its latest range, whilst commodity currencies are still under pressure due to record low prices in metals and oil.

During the upcoming days, the US and the UK, the only two economies in route to tighten their economic policies, will release inflation macroeconomic data, which will likely determinate the trends for the week.

Technically the EUR/USD pair closed at its highest in four weeks last Friday, just above the 1.1100 level. Earlier in the week, the pair traded as high as 1.1213, but the  longer term technical picture maintains a neutral stance, with the pair trading within a clear range ever since mid June.


The latest rally has been limited by a bearish 200 DMA, around 1.1170 for this Monday, which should continue to attract selling interest in the case of a bullish move. Shorter term, the 4 hours chart shows that the price has broken below a bullish 20 SMA, while the Momentum indicator heads sharply lower below its 100 level, and the RSI indicator also turned lower around 53, all of which supports a test of the 38.2% retracement of the latest bullish run around 1.1075. This financial trading course may be very useful if you are not sure how the RSI indicator works in forex trading.

A break below this last level should signal further declines towards the 50% retracement of the same rally, around 1.1030.

Meanwhile the USD/JPY pair closed the week unchanged, a handful of pips above the 124.00 level, having been confined to tight weekly ranges since mid July.

The risk-averted sentiment triggered by the PBoC last week has barely affected the JPY that failed to appreciate as investors run towards gold and the Swiss Franc, ignoring the Nipponese currency.

Technically, the longer term upward potential seems to be fading, with the daily indicators posting a steady decline towards their mid-lines. Nevertheless, the downside seems well limited, as in the same chart, the 100 SMA maintains a bullish slope around 122.50, and dips towards the level will hardly affect those who prefer to buy on dips.


Shorter term, the 4 hours chart presents a neutral-to-bullish technical stance, as the price is hovering around a horizontal 100 SMA, whilst the Momentum indicator heads north above the 100 level and the RSI remains flat around 46.

Share!Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+