Dollar gains prominence against taper backdrop

Earlier today, the U.S. currency rose against most major currencies as expectations that the Federal Reserve will continue to scale back its stimulus program this week fueled demand for the greenback. What impact did these moves have on major currency pairs? If you want to know our take on this question, we invite you to read our today's Forex Trading Alert.

EUR/USD (FOREX:EURUSD)

Looking at the above chart, we see that EUR/USD extended declines and broke below the 38.2% Fibonacci retracement level based on the recent rally and the medium-term rising support line (seen more clearly on the chart below). This is a bearish sign – especially when we factor in sell signals generated by the CCI and Stochastic Oscillator. As you see on the above chart, with this downswing the pair reached the 50-day moving average and approached the next Fibonacci retracement, which triggered a corrective upswing. Nevertheless, this move doesn’t change anything because all the above negative signals support the bearish case at the moment.

Very short-term outlook: bearish

Short-term outlook: mixed

MT outlook: mixed

LT outlook: bearish

Trading position (short-term): we do not suggest opening any trading positions at the moment.

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