CURRENCY ANALYSIS Oil Prices Fall UK Most Affected GBPUSD.PNGDaily Chart EUR/USD

The pair is currently trading in a downtrend. S1 has been identified to be a weak floor for the pair which has tested this level once at the end of June 2007. S2 is also a weak floor for the pair which has tested this level four times and has failed to break it. The last test for S2 was in early June 2010.

R1 is a strong ceiling. The pair has tested this level three times and has failed to break it. R2 has been tested twice and the pair has failed to break this level and it therefore it remains a strong ceiling for the pair.

Technicals: MACD (Moving Average Convergence Divergence) and MAs (Moving Averages)

· The 200-day MA and the 50-day MA is downward sloping indicating a bearish stance for the pair. The 200-day MA and the 50-day MA will provide additional resistance to the pair respectively. R1 is currently being supported by the 50-day MA.

·         The MACD is below zero and below the red signal line. The MACD has displayed a higher low, whilst the pair has displayed a lower low indicating a bullish divergence although this pattern may fail if the US Dollar is much stronger relative to the Euro

In the short-term the pair is bearish. If the TLTRO data is disappointing, then the ECB is likely to implement QE which will further depreciate the currency. Also, with oil prices continuing to tumble this will hurt the Euro area in the short term. The US will be enjoying the slump in oil as it is denominated in USD and it should benefit from this in terms of growth.

Ajay Pankhania
Technical Analyst
Accendo Markets

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