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    IronFX Essential Intraday Comment | 13/07/2015

    • The dollar traded higher against almost all of its G10 peers during the European morning Monday. It was lower only against GBP.

    • EU leaders have reached an agreement that opens the way to a third Greek bailout program, if eventually the Greek parliament approves tough austerity measures. Athens must now approve by Wednesday a series of legislations that include the streamlining of the VAT system and the broadening of the tax base, as well as improve long-term sustainability of the pension system. In addition, it has to pass another 2 bills by 22nd of July in order to rebuild trust and start negotiations on a new bailout program. Eurozone finance minister will reconvene later today to discuss how to support the country while the details of the bailout are negotiated. Even though EUR/USD gave back all the early morning gains and fell a bit more, the European stock markets opened higher on the news that a deal was reached. In the meantime, Bund yields moved higher as the uncertainty over the Greek crisis had diminished somewhat.

    EUR/GBP traded lower during the European morning Monday completing a minor-term double top formation. Currently the rate is testing the support barrier of 0.7110 (S1), and I would expect a decisive dip below that support to set the stage for extensions towards the 0.7070 (S2) zone. Looking at our short-term oscillators, I see that the RSI fell below its 50 line and is pointing down, while the MACD, although positive, has topped and fallen below its signal line. It points south as well and could be headed towards its zero line. What is more, there is negative divergence between both these indicators and the price action. These momentum signs magnify the case that EUR/GBP is likely to continue to trade lower, at least in the short run. As for the bigger picture, although the rate printed a lower low on the 29th of June, I see positive divergence between both the daily momentum studies and the price action. As a result, I prefer to stay flat as far as the broader trend is concerned. I would like to see a clear close below the psychological zone of 0.7000 before I get confident that the prevailing long-term downtrend is back in force.

    • Support: 0.7110 (S1), 0.7070 (S2), 0.7020 (S3)

    • Resistance: 0.7150 (R1), 0.7200 (R2), 0.7225 (R3)

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