TCI Forex Trading Signals: EURUSD March-April 2015

“Never Trade against a Major Central Bank”

□ Market: Foreign Exchange

□ Asset: EURUSD

□ Forecast: EURUSD downtrend continuation (↓) after a short-term uptrend correction

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EURUSD Outlook

If there is one constant rule in Forex trading, it is: “Never trade against the will of a major central bank.” Major central banks like the Fed, ECB, SNB, and BoJ hold many hidden tools and are ready to manage their currencies based on long-term monetary strategies. Right now, the Fed is the only major central bank comfortable with its currency strengthening. The ECB and BoJ are focusing on flexible monetary policies to try to boost their economies. Meanwhile, the US economy is growing, unemployment is falling, and interest rates are expected to rise in the second half of 2015. In this environment, the US Dollar is likely to strengthen further against the Euro and Japanese Yen in the coming months. EURUSD may even trade around 1:1 soon.

However, since the Euro is near a 12-year low against the USD and the USD has gained about 10% against the Euro in just one month, it’s worth considering a possible short-term Euro correction. According to TCI, EURUSD is oversold, with the indicator again near -11%, similar to our previous EURUSD signal in February 2015. At the time of this analysis, EURUSD trades at 1.0560. With neutral news, EURUSD could rise to 1.0650 or even 1.0750.

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Evaluating Our Previous Trading Signal

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EURUSD Technical Analysis

The Euro is trading near its lowest level against the US Dollar in 12 years. Here are some key EURUSD support and resistance levels.

■ Strong Support / Demand Level: 1.0550-1.0450 | 1.0350-1.0300 | 1.0030-1.0000 | 0.9650

■ Strong Resistance / Supply Level: 1.0600-1.0650 | 1.0750 | 1.0900 | 1.1030

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TCI on EURUSD

Here are the current TCI readings for EURUSD.

On March 11, 2015, the TCI showed EURUSD at -11.25%. This clearly indicates that the EURUSD market is oversold in the short term, making an upward correction likely. The expected targets are 1.0650, possibly rising to 1.0750.

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EURUSD Important News and Updates

Here are some important news and updates about EURUSD:

□ Goldman Sachs forecasts EURUSD to trade at 1.020, 1.000, and 0.950 in 3, 6, and 12 months, respectively.

□ US industrial production rose 0.1% (seasonally adjusted) in February 2015, below the expected 0.2%. January’s figures were also revised down.

□ US manufacturing production fell 0.2% in February 2015, despite a forecasted 0.1% increase.

□ US retail sales dropped 0.6% in February 2015, against a forecast of a 0.3% rise.

□ The US unemployment rate fell to 5.5% in February 2015, down from 5.7%.

□ The National Association of Home Builders reported the Housing Market Index dropped to a 7-month low of 53.0 in March 2015, down from 55.0 in February. Levels above 50 still indicate a positive outlook for US home sales.

□ The ECB’s quantitative easing program is actively ongoing.

□ The Euro interest rate remains steady at 0.05%.

□ Eurozone CPI (YoY) for February 2015 was -0.3%, better than the forecasted -0.4%.

□ European stocks are rallying as the Euro weakens against other major currencies, boosting exporters like Germany. However, a short-term bubble is forming, and a strong correction seems likely.

□ ECB Governing Council member Ignazio Visco recently said the Euro has dropped faster than expected.

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■ Free Forex Trading Signals: EURUSD

George M. Protonotarios, Financial Analyst

for Trading Center (March 16th, 2015)