FX Traders’ weekly EURUSD fundamental & technical picture, this week’s market drivers that could change it- the bullish, the bearish and likely EURUSD direction.
The following is a partial summary of the conclusions from the fxempire.com weekly analysts’ meeting in which we cover outlooks for the major pairs for the coming week and beyond.
Summary
- Technical Outlook: Edging towards confirmed top. As for a reversal, we need a lower move before we can call the start of the next leg down.Â
- Fundamental Outlook: Neutral near term, bearish longer term. Light calendar suggests fundamentals not likely to move the pair.
- Conclusions: Confirmed break or holding of support could determine the pair’s direction given the likely lack of fundamental surprises. FOMC optimism might provide the push needed.
- Trader Positioning: Retail traders making classic mistake of playing a bounce that hasn’t started.
- Conclusions: What’s needed to change expectations, and bring a EURUSD breakout
Technical Outlook
For the first time in 6 weeks, the EURUSD had the bearish uncertainty about ECB stimulus lifted, so it could resume its usual tracking of overall risk appetite as reflected by the major US and European stock indexes.
Overall Risk Appetite Per Weekly Charts Of Leading Global Stock Indexes: Taking A Break
Overall risk appetite as reflected in US and European indexes took a break last week, but its outlook for the coming weeks remains firmly bullish as nothing suggests this was more than a normal technical pause, understandable after a long steady rise, significant overhead resistance looming just above, and no potent bullish news to justify a successful test of that resistance just yet.
EURUSD June 16 Weekly Technical, Fundamental Forecast: Breakdown Or Bounce?
Weekly Charts Of Large Cap Global Indexes Feb 24 2013 To Present With 10 Week/200 Day EMA In Red: LEFT COLUMN TOP TO BOTTOM: S&P 500, DJ 30, FTSE 100, MIDDLE: CAC 40, DJ EUR 50, DAX 30, RIGHT: HANG SENG, MSCI TAIWAN, NIKKEI 225
Key For S&P 500, DJ EUR 50, Nikkei 225 Weekly Chart: 10 Week EMA Dark Blue, 20 WEEK EMA Yellow, 50 WEEK EMA Red, 100 WEEK EMA Light Blue, 200 WEEK EMA Violet, DOUBLE BOLLINGER BANDS: Normal 2 Standard Deviations Green, 1 Standard Deviation Orange.
Source: MetaQuotes Software Corp, www.fxempire.com, www.thesensibleguidetoforex.com
02 Jun. 14 21.57
Key Points
Our sample of weekly charts for leading global stock indexes shows all of our sample leading US and European indexes down together for the first time in a while, driven by a combination of fundamental factors discussed below, as well as nearby overhanging technical resistance of big round numbers (like 2000 on the S&P 500 and 17,000 on the DJIA).
In sum, while they all retain strong medium term upward momentum as per their weekly charts, we’ve a perfectly normal minor pullback given the intimidating resistance and lack of news to draw in buyers quite yet. Investors will likely be watching for a near term bottom to form before considering new longs that could fuel another assault on yet another all-time high above these level on the US indexes (which of course influence EU indexes).
EURUSD Specific Technical Outlook: Edging Towards Confirmed Topping
Long Term Outlook Per Monthly Charts: Bearish- Time For New Long Term Shorts?
The long term downtrend line from July 2008 is looking safer as the threat to the 2008 downtrend line recedes. For now traders are respecting the long term downtrend. As discussed in fundamentals section below, ECB easing along with Fed, BoE moves to steady or tighter policy reinforce long term bearish bias for EURUSD.
 
EURUSD Monthly Chart April 2005 to Present
KEY: 10 Month EMA Dark Blue, 20 Month EMA Yellow, 50 Month EMA Red, 100 Month EMA Light Blue, 200 Month EMA Violet, DOUBLE BOLLINGER BANDS Normal 2 Standard Deviations Green, 1 Standard Deviation Orange. Green downtrend line from EURUSD peak of July 2008 to present, green uptrend line from August 2012 to present. White Fibonacci retracement lines for downtrend of August 2008 To June 2010, yellow Fibonacci retracement lines for downtrend of May 2011 To July 2011.
Source: MetaQuotes Software Corp, www.fxempire.com, www.thesensibleguidetoforex.com
03 Jun. 14 21.5 or 02 Jun. 14 21.57
Key Points To Note
Just for long term perspective, note how the descending long term EURUSD trend line from August 2008 now seems once again alive and well, after 3 months of failed tests from February through May. Midway through June, with EU bond rates falling and the EUR’s rate/yield advantage fading, odds favor June closing in the red, if not below the shorter term uptrend line from mid-2012.
Medium Term EURUSD Outlook Per Weekly Chart: Neutral, On The Brink Of Bearish
