Budrigantrade review-EUR/USD will continue to decline during the week
2023.02.06 13:20
Budrigantrade review-EUR/USD will continue to decline during the week
By Tiffany Smith
Budrigannews.com – After staging a significant reversal day candle on Friday in response to a much stronger-than-expected U.S. economy, EUR/USD is trading slightly lower on Monday. The failure to secure a green close occurred while the pair was testing a crucial near-term resistance. EUR/USD has been below the multi-year ascending trend line for the past ten months, connecting lows from 2016 and 2020. This line was finally breached last week in April.
Bulls have been able to test this crucial resistance level for the first time since April, despite several unsuccessful attempts in recent weeks. The pullback on Thursday and Friday caused the EUR/USD pair to close below the trend line on a weekly basis, resulting in a failed breakout at the key level, which is typically a very strong technical indicator that the price action is changing direction. On Wednesday, the pair was able to close above the trend line. On Thursday and Friday, however, the pair closed below the trend line.
The EUR/USD price is currently testing support at 1.0780, and it is likely to correct to at least 23.6 percent of the Fibonacci retracement of the move higher from September 2022 to February 2023, when the pair gained more than 15%. The more significant 38.2% Fibonacci support is at 1.0456, while the 23.6% Fibonacci support is at 1.0675.
The area around 1.09 will continue to be a major support on the upside. The 100-week moving average at 1.1059 would be reached if the EUR/USD pair were to break above this resistance level.
Budrigantrade planners: After the quick reaction to the NFP report, the most interesting thing happened. Some desks simply branded the release an outlier, and so forth. Analysts characterized it as a repeat of the surprise beat that occurred the previous year due to seasonality factors.
However, as the market attempted to make sense of the payrolls data, the dollar never lost even half of its gains. The dollar should have wiped out its gains if the market truly believed that this was a one-time occurrence, as it has in the past this year. Things did indeed feel different this time, and the figures appeared to confirm that a game-changing event was taking place.
Analysts at BofA: ” Each of our model CTA’s short USD positions is at risk of being covered due to the sharp upward movements on Thursday and Friday. MXN, EUR,,, and finally are the pairs closest to their trigger points.
The strategists at ING FX: We believe that DXY could hold around 103.00 until new first-tier US data are released next week, which could re-energize expectations for Fed rate hikes and US growth.
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