E EURUSD - Are You Ready For A Big Monster Move?

The February FOMC meeting also saw the central bank staying mum on when the next rate hike will come. The payrolls report for January saw a good number of jobs being added during January, but wage growth remained weak rising just 0.1% on a month over month basis. The enthusiasm was also toned after December’s wage growth was revised down by half to just 0.2%.

Elsewhere, inflationary pressures are showing that most of the price increases are coming due to higher oil prices as wage growth remains sluggish. Considering all of this and the fact that markets which got ahead of itself under the Trump victory could start seeing a scaling back of expectations.

Last but not the least, let’s not forget about the dollar bashing by President Trump, which is weighing on the currency. Given the fact that the new president is likely to see manufacturing grow, a weaker currency is likely to be more preferred, regardless of what others in the Trump administration have to say.

EURUSD - Inverse Head and Shoulders Watch

For EURUSD, the sideways price action is likely to continue for a while but watch out for the dip to $1.0600 - $1.05800.

EURUSD Renko Chart
EURUSD Renko Chart

The Renko chart below shows a massive inverse head and shoulders pattern taking shape with the neckline resistance at $1.0800 currently being tested. The anticipated decline to $1.0600 - $1.0580 stems from the fact that the steep rally in price came with no meaningful pull backs to the support level that was formed.

Therefore, a decline to $1.0600 - $1.0580 could mean that the right shoulder could be formed. This would see another attempt in EURUSD towards $1.0800 and if this resistance breaks, further gains can be seen coming towards $1.1000 and $1.1200.

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I/We do not have any positions in the above mentioned instrument.

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