26, October 2015

EUR/USD (a 4-hour chart)

EUR/USD (a 4-hour chart)

General overview

Despite the October business activity strong data, the euro remains under pressure. The ECB President gave a clear signal to the market about the high probability of easing program expansion in December. The chief banker’s speech at the press conference made the euro decline by 200 points against the dollar.

There is an assumption that the euro zone main bank can begin to solve their problems not only with the help of quantitative easing, but also using other instruments such as the deposits interest rates increase, the other asset purchases or even intervention in the foreign exchange market.

The first support is at the level of 1.0925. The resistance is at the levels of 1.1050 and 1.1150.

We have a strong and confirmed sell signal. The price broke the Ichimoku Cloud. The pair is under the Chinkou Span. The Tenkan-sen is crossing Kijun-sen downwards; two lines are forming the “Dead Cross”.

The MACD indicator is in a negative territory. The histogram is decreasing.

Trading recommendations

The target the price to go now is the level of 1.0925. The EUR/USD is undervalued and we believe the pair shall bounce upwards now.