Fan Yang
All posts from Fan Yang
Fan Yang in Fan Yang,


Fundamentals Event Risks:
The EUR/USD has been bearish since the FOMC statement gave the USD a boost across the board 2 weeks ago. EUR was pressured after ECB members gave some dovish statement, basically saying the bank is ready to cut rates. Deflationary risk has been a major factor contributing this dovish lean, so this week's CPI data will be key.

1) The EU CPI data for March comes out on Monday. Economists forecast the annual inflation in the UK to be be 0.6% in March after a 0.7% reading in February. This would be the lowest annual inflation rate since November 2009, when it was 0.6%.


As you can see from the inflation trend in the past couple of years, the ECB does have a strong reason for its concern of deflationary risk.

ECB Meeting, Press Conference:
2) If the inflation rate does decline, the ECB will have to address it during its policy announcement on Thursday, which is followed by an ECB press conference.

The main US fundamental event risk on tap will be Friday's Non-Farm Payroll report, forecast to be 196K, after a better than expected 175K in February.


A strong reading ie. 230K+ would be a USD-positive reading. However, a strong reading that is closer to 200K might be generally positive for risk sentiment, which is USD-negative. Which will dominate? Poor data should be USD-negative, but will also limit a rally in EUR/USD due to risk-aversion.

Stochastic, downside risk:

The daily Stochastic is below 20. In a bullish market, this is an oversold signal, suggesting the market should find support soon, if not rebound.

(EUR/USD daily chart 3/31 Asian session)

EUR/USD is technically still bullish and the 2-week retracement could set up the market to buy on a fade.

There is downside toward 61.8% retraement at 1.3663, or even lower, to a rising support seen in the daily chart that comes up from the Nov. 2013 low. The 200-day SMA will be coincident with the rising support, adding more reason for the market to find support there if price does reach the 1.3650-70 area.


A break above 1.3875, last week’s high, would be a sign of bullish continuation.