From a technical perspective last week was not an easy one for the euro with a divergence of sentiment across the complex. Against the USD it found some much needed support at the 1.0825 support level, which provided the springboard for a move up and through the VPOC on the daily chart at the key 1.09 price point. The pair managed to maintain this bullish momentum through to the end of week before finally ending the week at 1.1004 on reasonable volume. However, this move higher has, so farfailed to follow through in today’s trading session with the 100 ema providing the cap. Bearish sentiment towards the euro has also increased in the futures market where shorts have added 18.1k contracts taking the total gross short position to 172.5k, the largest increase since November 2015.
This week we also have the ECB interest rate decision and obligatory press conference, and given the current economic downturn in the eurozone, the market is expecting Draghi to increase the current bond/asset buying program, or even an announcement of some new and innovative measures.
With eurodollar somewhat constrained, euro brears may wish to consider the eur/aud where bearish momentum has continued, and provided the pair take out the key support at the 1.4735 region, then expect a quick momentum run to 1.4644.
Finally, for a view of market sentiment on longer-term timeframes, our currency strength indicator may provide clues. And here, while we have the euro oversold on the daily chart and the likelihood of a move higher, this has to be placed in the context of the weekly chart, where sentiment is still heavily bearish, particularly against the Aussie.
Divergence in the Euro Complex
Divergence in the euro complex appears across pairs. EUR shows strength in some. Weakness in others. This relational split signals shifting sentiment. Traders watch for potential turns or continuations.
What Divergence Reveals
The euro complex includes pairs like EUR/USD, EUR/GBP, and EUR/JPY. Divergence occurs when euro behaves differently. Strong vs USD but weak vs JPY hints at risk-off. Volume price analysis (VPA) confirms—high volume in one direction validates the split.
Spotting Divergence with Quantum Tools
Quantum currency matrix highlights divergence clearly. It shows cross-pair performance. Strength indicator ranks EUR relationally. Extremes across pairs warn of exhaustion or reversal. VPA adds depth—divergence with low-volume signals indicates weakness.
Practical Trading Insights
Divergence often precedes changes. Weak euro vs safe-havens favours shorts. Strong vs commodity currencies supports longs. Anna Coulling’s VPA approach with Quantum tools spots these early. Avoid forcing trades without volume confirmation.
Divergence in the euro complex offers rich lessons. Quantum indicators make relational shifts visual and reliable. Stay alert for sentiment clues in crosses.
Key Eurozone Fundamentals That Impact the Euro Most
The euro (EUR) is influenced by a range of Eurozone fundamentals. Some carry more weight than others. Traders watch these for directional clues. Strong data boosts EUR. Weak figures pressure it lower. Volume price analysis (VPA) confirms reactions—high volume on moves shows conviction.
Top Eurozone Fundamentals Driving EUR
These releases move EUR pairs sharply:
- ECB Monetary Policy Decisions Rate changes or forward guidance dominate. Hawkish tone (hikes) strengthens EUR. Dovish (cuts or QE) weakens it. Press conference adds volatility.
- Inflation Data (HICP) Headline and core Harmonized Index of Consumer Prices. Above-target inflation favors hikes—EUR up. Below-target signals easing—EUR down.
- GDP Growth Quarterly figures show economic health. Strong growth supports EUR. Weak or contraction pressures it.
- PMI Surveys (Manufacturing and Services) Flash readings lead the calendar. Above 50 signals expansion—bullish EUR. Below 50 warns slowdown.
- Employment/Unemployment Low unemployment supports consumer spending—EUR positive.
Political events (elections, fiscal policy) add layers but data drives most.
How These Impact EUR Trading
Strong fundamentals attract capital—EUR rallies. Weak ones trigger outflows—declines. VPA spots real moves—high volume post-release validates direction. Low volume spikes warn of traps.
Quantum currency strength indicator ranks EUR live on data. Matrix shows relational shifts.
VPA and Quantum Tools for Trading Fundamentals
VPA confirms conviction. High volume on EUR upmoves post-strong data = sustained strength. Quantum Trend Monitor aligns direction. Prepare with calendar—trade reactions, not forecasts.
Anna Coulling’s VPA approach with Quantum tools turns Eurozone fundamentals into disciplined trades.
Key Eurozone data drives EUR volatility. Focus on ECB, inflation, GDP, and PMI. VPA with Quantum delivers the edge.
By Anna Coulling