By Alpari
Yesterday’s Trading:
The DXY on Monday sat in a 97.80 – 98.05 point range. The euro/dollar was consolidating in a 1.0955 – 1.0985 range. The ranges were narrow due a fall in trading volumes throughout the day. Many traders closed their positions before Christmas and this meant a fall in market liquidity.
Main news of the day (EET):
Market Expectations:
As New Year approaches, trader activity remains low. However, this does not mean that currency rates will sit in sideways trends until 4th January. I’ve included a graph of the euro/pound in the analysis today. It should help us find the vulnerable spot for the euro/dollar.
Free Reports:
The calendar is empty, so a spike in volatility is likely to occur through the cross rates. On the cycles I have the euro/dollar down in the first half of the day and only on the American session seeing a storm of the daily trend line.
Technical Analysis:
The euro/dollar has been in a sideways for 16 hours on the hourly. The consolidation range is shrinking. The pair is readying to undergo some sharp fluctuations so as to stray from the LB. I think that as soon as the euro drops to the LB, the oscillator stochastic will return to the buyer zone.
Keep an eagle eye on the euro/pound cross since, if it passes the 0.7350 support, it won’t be worth expecting to see any EUR/USD growth. Due to a weakening of the USD, the GBP/USD will shoot upwards and the euro will stay in its sideways. Any strengthening of the dollar will see the market forming a mirror image, the euro will fall to 1.0920 and the pound/dollar will keep trading around 1.4886 if there is any support from the cross.