EUR/USD analysis

I’m going to analize the EUR/USD from the 9th of July 2015. As we can see in the next chart, the USD was bearish vs the EUR, the main reason was the Chinese economy turmoil. During the 4th quarter the USD was stronger than the euro. We have seen a stronger Euro in 2016, but after the Brexit and the growing euro-skepticism the european currency has lost around 3,5% vs the dollar. I think it will keep going down in the next 3 months. Italy will hold a constitutional referendum in October. A negative outcome would bring a new phase of political uncertainty. Italy is one  of the countries with the highest share of population that thinks they would be better off the EU.

    EUR/USD, Daily, 10/07/2016

Considering the macroeconomic environment and how it can affect the different assets, it’s one of the most important skills in financial markets. Sadly, it’s not enough. Keynes said: “the market can remain irrational longer than you can remain solvent”. Let’s check how this pair has behaved this year.

    EUR/USD statistics from 09/07/2015 to 08/07/2016

As you can see in the chart, the mínimum yield was -2.43% and the maximum yield was 3,04%. Mainly the positive mean (0.00256%) is one of the most important figures, it shows that the euro has been stronger than the dollar. The positive asymmetric coefficient shows that the yield’s distribution is skewed to the right. The mass of the distribution is concentrated on the left of the figure but there are more extreme values in the right side. The distribution is leptokurtic, which means that has fatter tails than the normal distribution.
The next two charts are part of the whole analysis, they help to understand the data in the table.

    EUR/USD Daily change


EUR/USD probability of the different returns

Technical analysis
Once you have clear the fundamentals, you can support your trading idea with technical analysis. The color code of this chart is:
• Orange is a WMA (n=10)     Since now I will refer to as WMA10
• Red is a SMA (n=20)             Since now I will refer to as SMA20            
• Blue is a SMA (n=50)            Since now I will refer to as SMA50
• Green is a SMA (n=100)       Since now I will refer to as SMA100
• Grey is a SMA (n=200)         Since now I will refer to as SMA200

I’ve decided to show the RSI and the MACD below the main graph.

    Own elaboration, EUR/USD technical analysis

I only analyze the last 262 days this is why some of the indicators don’t start from the last day. (Note, I analyze  through R programming. I multiplied the rate for 10^4 in order to simplify some of my tasks.)
As I said before I think the value of the EUR will decrease. As you can see in the chart the WMA10 and the SMA20 crossed the SMA50 and SMA100. Aparently, it means that in the short term the EUR/USD will go down.  The SMA50 is decreasing and it wil probably cross under the SMA100 in 1 or 2 weeks. The RSI is low (40.943), so we can see a small rebound but I’m bearish. The MACD is below the signal.
It’s really difficult to forecast the long term, the american elections will be held in November. As we have seen with the Brexit, a political decision can change the world.
This post is not an investment recommendation, it’s my own opinion.