EUR/USD Line Chart & TCI Technical Analysis

The EUR/USD exchange rate is falling as the economic and the political risk in Eurozone is growing. Recent developments including the uncertainty in the Euro area after the Italian el
ections are enforcing the Euro depreciation against the US Dollar. The year 2013 will be a year of recession for Eurozone and growth is expected not before 2014, so a cut in the Euro Interest rate seems today very possible.

Technical Analysis on EUR/USD using TCI+ Indicator

Trading Center Indicator (TCI) is a technical analysis system that can be used in any kind of financial market. (»What is Trading Center Indicator?). In this analysis, a new version of TCI is presented. This new version which is called TCI+ is designed exclusively for the Forex Market. Two EUR/USD charts are following which correspond to the same time frame (January 1999 – February 2013).

Chart: EUR/USD 1999-2013

Forex Technical Analysis using TCI+

1) In the upper area of the graph, there is a Line Chart (Blue line = closing prices) and the Moving Average of 160 days (Red line = 160MA). It is obvious that each time the EUR/USD moves above the Moving Average of 160days then EUR/USD enters a Bull Market and when it moves below the Moving Average of 160 days the EUR/USD enters a Bear Market. In the 25th of February 2013 the 160-days Moving Average of EUR/USD is 1.2917.

2) The lower graph area contains a TCI+ chart which indicates the mid-term market condition of EUR/USD. As we can clearly see TCI+ has signaled strong movements in the past when it reached levels below the area of -4% / -5%. In the 25th of February 2013, TCI+ is at -2.82%.

Forex Forecast on EUR/USD

Maybe the EUR/USD exchange rate will fall to reach the Moving Average of 160 days (1.2917). At this particular point, TCI+ will exceed -4%, signaling a possible rebound. At the 1.2910 - 1.2920 we should expect a strong EUR/USD turnaround.


The Role of Central Banks in 2013

The Abnormal Monetary Policy of European Central Bank

The current monetary policy of ECB regarding the Euro interest rates is against any macroeconomic theory of the last 100 years. Unemployment is rising fast, the supply of money is limited while the European economy is shrinking. Although all that important facts the ECB claims to face inflationary concerns, and thus refuses to cut Euro rates. This policy is against any past macroeconomic experience and it can’t continue for much longer. Euro interest rates must fall.

The European Central Bank

FED Monetary Policy in 2013

From the other hand and as we have already mentioned in a previous analysis (»Gold Price Forecast 2013) the year 2013 will be crucial as concerns the FED long-term monetary policy. If the US inflation rise above 2.0% or the US unemployment fell below 6.5%, the FED is expected to raise aggressively the US interest rates. In that case and given the economic problems of Eurozone, we could see a strong movement of EUR/USD exchange rate, even to 1.2000.

Link To Federal Reserves Research


Giorgos Protonotarios, for Trading Center (February, 26th 2013)

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