Almost all exotic currencies have declined so far this year against the US Dollar or even the euro. This is for several reasons, but the Fed was one of the first central banks to increase interest rates regularly. Other central banks then followed and tightened their economies too. So is the strengthening of these currencies on the way?
EUR/HUF on the trend line
EUR/HUF appreciated this year to 435 but fell after The National Bank of Hungary increased its overnight collateralized lending rate by 950 basis points (bps) to 25% in an emergency meeting on October 14th. The currency pair then fell from 429 to 405 in a matter of days. Now it begs the question of whether the uptrend will hold or this is the end of it.
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EUR/HUF sits on a crucial trend line, from which it could continue upward or break downward. Hungary is fighting inflation and weakening currency hard, so it could really send this currency pair to support at 392. However, traders should wait for the confirmation of this move by checking if the trend line gets broken. Now there is an accumulation of positions, and the direction will be clear when EUR/HUF bounces from this trend line or breaks it.
EUR/SEK double top
For a brief moment, EUR/SEK traded above a crucial resistance at 10.92. Then a double top formation was created above this level, which sent the price lower. This currency pair declined to jump above the psychological level 11 and broke an important trend line that held the uptrend that was formed after summer.
If the next candles decline this level and continue below it, that is the end of an uptrend. However, be careful, as this signal still needs to be validated and could send the currency pair to 11 or even higher. But if EUR/SEK manages to move under the blue level, a move toward 10.6 or even lower could occur.
EUR/TRY at a crossroads
EUR/TRY has been moving around a very important level from December 2021 for months, confusing many traders about the next move. The Turkish Lira is known as one of the weakest currencies, which declines over time because of its high inflation rate. This is why another move upward can be expected if the trend line is not crossed.
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In the next few days, it will be important for the Turkish Lira to show some strength and break the trend line if a downward move is supposed to come. If the volatility remains low, with the currency pair slowly moving up, it is only a matter of time before it skyrockets again. EUR/TRY is at a crossroads between a price of 20 or 16.5.
Don’t forget to wait for confirmation signals and calculate your risk first before entering a trade. Also, look if the swap on a currency pair is worth the trade since trading currency pairs is not only about what the charts say.
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