Volume Figures Not Supporting Most Recent Leg Down in Euro

Talking Points

  • EUR falls to YTD lows, but volume diminishes
  • Volume picture remains supportive for USD/JPY
  • Glaring OBV divergence in USD/CHF a potential negative in the near-term

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Daily Volume Chart: EUR/USD

Volume Figures Not Supporting Most Recent Leg Down in Euro

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD fell to its lowest level in 14 months this week
  • Daily volume has been in a steady rise since July which bolsters the medium-term downtrend
  • However, daily volume over past week has been below average despite the new lows and is a possible sign of a fatigue in trend
  • On-Balance-Volume has also failed to surpass the early September lows and is another sign that a correction is looming
  • A move through 1.3010 on higher than normal volume is needed to confirm that a more serious counter-trend move is underway

Daily Volume Chart: USD/JPY

Volume Figures Not Supporting Most Recent Leg Down in Euro

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY touched its highest level since 2008 this week
  • A steady rise in volume has accompanied the move higher since July
  • The steadyc rise in On-Balance-Volume is supportive
  • Price move under 106.80 on above average volume, however, would force a re-think of the broader positve bias

Daily Volume Chart: USD/CHF

Volume Figures Not Supporting Most Recent Leg Down in Euro

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/CHF traded to its highest level in over a year this week
  • Steady volume rise since May is supportive of broader trend
  • Divergence in daily OBV, however, suggests the exchange rate is becoming vulnerable to a correction in coming weeks
  • A daily close below .9295 on above average volume is needed to shift near-term bias lower

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Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX

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