London stocks slide post-holiday as global bond rout and Middle East strikes weigh
At the end of February and the entire volatile winter, EUR/USD plummeted due to significant improvement of the US bond yield, which provided the “greenback” with huge support. The aggressive anti-coronavirus campaign all over the world, including the USA, made investors believe that inflation would boost and the US Federal Reserve might get rid of its stimulus programs much earlier than it was thought before.
The US 10-year bond yield reached this year’s high and added 1.6%.
The statistics published last Friday were in favor of the USD. For example, the Personal Income increased by 10.0% in January after adding just 0.6% m/m in the previous month and against the expected reading of 9.4% m/m. At the same time, the Personal Spending showed 2.4 m/m against -0.4% m/m in December.
In the H4 chart, after reaching the upside target at 1.2240, EUR/USD is correcting towards 1.2040; it has already reached the short-term correctional target at 1.2061. Possibly, the pair may grow to test 1.2140 from below and then complete the correction by falling towards 1.2040. After that, the instrument may start another growth to break 1.2140 and then continue trading upwards with the target at 1.2250. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is breaking 0 to the downside, thus implying a further descending correction on the price chart.
As we can see in the H1 chart, the asset is falling with the target at 1.2040. After finishing the third wave at 1.2060 along with the rising impulse at 1.2100, EUR/USD has completed the correction towards 1.2070, thus forming another consolidation range. If later the price breaks this range to the upside, the market may grow to test 1.2140 from below and then fall to reach the above-mentioned target. After that, the instrument may form one more ascending structure towards 1.2144. From the technical point of view, this scenario is confirmed by the Stochastic Oscillator: its signal line is moving around 50 and may later grow to reach 80.
By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
Disclaimer
Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
