Morning Market Updates – EUR/USD

US Labor day kept the price ranging between 1.1872 and 1.1921.The pair was sandwiched between 1.1888 and 1.1921 about 30+ pips in motion. Technical indicators on both hourly and 4 hours are directionless, but continue to hold above the 20 SMA.

The reversal candle on the 4 hours chart looks valid as the tail of the candle has not been breached, but the preceding candles are forming higher highs leading to a mixed signal. This however is clear on the daily chart with a trend continuation candle formed on the 31st of August after bouncing off the 20 DMA. During the previous days, candles have also closed with higher lows, thus making the reversal candle obsolete. The right signal to follow is based on the 31st price action and spinning your indicators around this formula.

Intraday traders are looking for a dip in price to get on the long boat while scalpers try to make the best of this range motion.

Global political tensions have been on the peak since the mid of this year with North Korea topping the list; the recent nuclear test by North Korea over the weekend and comments by US ambassador Nikki Haley “Kim Jongun is begging for war” have escalated this tension even further.

EU was supported by few minor releases such as the Sentix investor Confidence that rose to 28.2 from 27.7 and the Producer Price Index for the month was stable but remained below the previous year reading 2.2%. Final Services PMI for EU will be released today and is expected to grow thus indicating strength in the sector.

Investors will be focused on this week to analyze whether the ECB will judge the risk from the outcome of Europe’s corporate earnings that rebounded from the euro’s rise as a severe sentiment that could trigger the lengthening of its timetable for the removal of unconventional policy but the answer still remains NO.

Eurozone growth and Business sentiment continues to be positive and often beat expectations. This is an added point to stop postponing the announcement about tapering from this year to next and we may see some light at the end of the tunnel soon. EURO’s will continue to strength over the coming weeks and may last till the end of this year.
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