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| EUR/USD four-hour chart, source:FXDD.com |
cf. [EUR] Correction of Euro 2020 0311
cf. [EUR] Correction or Downward trend 2020 0305
cf. [EUR] Recovering Euro 2020 0302
cf. [EUR] Between the technical rebound and upward trend 2020 0226
One of the major currency pair EUR/USD dropped on Friday and it showed the possibility of building Head-and-Shoulders pattern in the four-hour chart. And we need to watch the market with short bias of euro in the short term.
The euro, which has been rising so far, retreated significantly in the weekly chart as if the upward trend was shifted to downward. If euro keeps dropping, it could be supported at 1.099x which has been the price-support band.
Though it succeeds to rebound next week, it may face 1.12 as the resistance line. The four-hour chart makes Head-and-Shoulders pattern.
And we should wait FOMC meeting held on Tuesday and Wednesday. Because the trend may be determined after US benchmark rate by FOMC.
Markets have been threatened by the global pandemic and oil war between two oil maker, Russia and Saudi Arabia.
The surplus oil-produce by top two oil producers led greenback and equities' prices in New York stock market. And euro could surge 1.29 percent on Black Monday, last week.
But the WHO's declaration of pandemic and oil-price plunge recalled the risk-off again.
Meanwhile, US President Donald Trump declared a national emergency over the coronavirus outbreak on Friday, and it made greenback surge. Currency pair EUR/USD plunged 0.57 percent or 0.0064 dollar to 1.11149 dollar. Dollar Index, dollar's price against the basket of major six currencies, rose 0.88 percent to 98.347.
Federal Open Market Committee, FOMC is held this week and it is expected to cut its benchmark rate, Federal Funds Rate, again. The benchmark interest rate band is 1.0~1.25 percent and market anticipate it 0.5 percent point cut to 0.5~0.75 percent. Fed Chair Jerome Powell already cut the benchmark interest rate 0.5 percent point early this month and euro rose.
European Central Bank, ECB froze its key rate, but it was not satisfactory to market participants. It kept euro down. Market expected more key-rate cut and more powerful action, but ECB didn't. Euro sank again, as it did in two previous months.
Due to the uncertainty, the market fluctuates every day.
Therefore Gjallarhorn thinks, the long bias of euro is still valid in long term. Lots of market participants expect Fed will cut the rate 0.5 percent point to max 0.75 percent on Wednesday. Falling euro may rebound after FOMC meetings and press conference.
Gjallarhorn plans to buy euro after confirming the trend.
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