The EURUSD continues to trade between the lower blue and red bands in its bearish channel. Its momentum remains biased to the downside, with the daily stochastic maintaining below 20 (green rectangle).
Given the daily influence, we viewed yesterday's late rally as suspicious. Thus, price reacting off the R1 pivot resistance is not a surprise. We note that both the hourly EMAs and stochastic have crossed down (black ellipses).
The latest ECB minutes do suggest further rate hikes. However, the minutes used "downturn" more than "recession." We wonder if this is the proverbial "head-in-the sand." If the hourly stochastic moves into its lower quintile (blue arrow) and holds, yesterday's price action was a rally in a downtrend, with the market pricing in a less aggressive ECB.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.