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EUR/USD Forecast 25 Jan 2016

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EUR/USD Forecast 25 Jan 2016
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The Euro climbed towards 1.0835

The Euro climbed towards 1.0835 in today’s early GMT hours but had difficulties breaching this level to the upside. The German IFO Business Climate survey was released earlier in the day and showed a value of 107.3, which is worse than what analysts’ expectations of 108.5.

This survey is well-respected because of its large sample size of about 7,000 businesses that are asked to offer a 6 month outlook regarding the economic conditions.

Usually the impact is rather strong, with lower numbers weakening the Euro but so far today we haven’t seen any downside price action. However, this is likely to change and we expect the pair do move south later in the day.

From a technical standpoint, the pair is making lower highs and the two Exponential Moving Averages (periods 100 and 50) are moving downwards and are well spread apart. This shows we are in a short term downtrend and that price has good momentum so we expect the pair to move lower.

Also, price bounced at 1.0835 which is now resistance and all these things combined determine us to trade Puts for the end of day.

How to trade

We favor end of day Puts entered as close to 1.0835 as possible. Aggressive traders can enter Puts at current price, while a more conservative entry is when/if price touches 1.0835 again.

Alternate scenario: enter end of day Calls if a one hour candle closes above the 100 period Exponential Moving Average (Red line on chart).

Expiry time: 21:00 GMT

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.

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