FxWirePro: Leading oscillators signal EUR/USD to extend slumps – all chances of retesting 1.08

The USD index has recouped half its post-payroll losses, though speaking about the dollar these days somewhat misses the point: idiosyncratic factors have driven cross-market correlations to such low levels that stability in the aggregate conveys little about the underlying frenzy across pairs.

On the flip side, Euro has been collapsing from the peaks of May 2014 (almost more than 23%) although some stability was seen from mid April'15 but still there is no trace of recovery despite all attempts by euro area leaders.

RSI (14) on weekly chart converging with falling prices (Currently, RSI trending at 43.6244). This leading oscillator has started evaluating when the prices touched 1.0885 by taking the computation of last 14 weeks periods the magnitude of recent gains to recent losses in an attempt to signifying the overbought pressures.

While %D crossover has been maintained on slow stochastic curve with every price dips (Currently, %D line at 33.3332, while %K line at 17.7829). Stochastic on monthly curve also remains in the oversold territory but proper trace of %K crossover that signifies weakness in the euro.

Hence, we still project 1.10 for end-2015, a cyclical low of 1.08 in Q1 2016, and a slow uptick from there to 1.11 by June 2016 and 1.13 by Q3 2016.