EUR/USD: the pair may continue to decline
1. Current trend of EUR/USD
On Wednesday the currency pair EUR/USD fell to the level of 1.3335. The rise in the American dollar was caused by publication of the minutes of July’s meeting of the US Fed Open Markets Committee. According to the minutes, majority of FOMC members agreed that phasedown of the quantitative easing program can be launched before the end of this year; however no specific dates have been indicated.
2. Important levels: support and resistance
At the moment the pair continues to decline, tending to the level of 1.3305. This level seems the key one, as it practically coincides with the moving average line of “Bollinger bands” indicator, with the level of 61.8% Fibonacci and also with the boundary of the ascending channel. In case of breakdown of this level, the price will drop to the level of 1.3200, which coincides with the lower line of “Bollinger bands” and the level of 50.0* Fibonacci. Otherwise, the price can return to the level of 1.3400. Attention shall be drawn to US Fed conference in Jackson Hole that starts today and which will be one of the fundamental events. Decisions made at this Forum can have dramatic impact on the movement in the pair. In the current situation it is advisable to place short positions if the price consolidates below the level of 1.3305. Profit taking is recommended at the level of 1.3200. Long positions can be opened from the level of 1.3360.
3. Technical indicators
Technical indicators on the daily chart confirm possibility of downward movement. Bollinger bands are directed upward; however, the price chart tends to the moving average, which is at the level of 1.3305. MACD histogram is in the overbought zone, its volumes are decreasing. Stochastic lines are crossing and directed downward, giving a sell signal.
Dmitriy Zolotov
Analyst of LiteForex Group of Companies