EUR/USD: US day off, calm expected

Previous:

On Wednesday the euro/dollar closed down. The euro lost out to the dollar, dropping to 1.0526. The inverted daily candle with bull divergence didn’t come off. A break from the weekly support also wasn’t managed. The growth in the rate of the dollar hastened during the American session after the release of positive macro-stats from the US and a growth in US bonds. The euro/dollar fell to 1.0526.

Durable goods orders, business activity in the manufacturing sector (Markit) and consumer confidence (Michigan University) all exceeded market expectations. They further strengthened market expectations of a Fed rate rise this December from 0.25% to 0.75%. According to data from CME Group FedWatch Tool, the likelihood we will see a rate rise in December is now 93.5%.

American stats:

• Michigan University’s US consumer confidence index rose to 93.8 (forecasted: 91.6, previous: 91.6);
• Markit’s index for business activity in the manufacturing sector rose to 53.9 (forecasted: 53.4, previous: 53.4);
• The index for durable goods orders in the US in September was at 4.8% (forecasted: 1.5%, previous: 0.4%);
• The number of unemployment benefit applications in the US for the week ending 19^th November was 251k (forecasted: 250k, previous: 233k).

Market expectations:

In Asia the euro has shifted yesterday’s minimum from 1.0526 to 1.0525. At the moment of writing this analysis, the euro is going for 1.0543 dollars. The Americans are having their Thanksgiving today and so there will be no trades in the country. Due to this there is expected to be low liquidity on the market and this could lead to sharp fluctuations. After yesterday’s weakening of the euro, I hope that today the price will sit in a sideways.

Day’s News (GMT+3):

• 10:00, German definitive GDP for Q3 of 2016;
• 12:00, German business climate index from Ifo for November;
• 12:30, UK October mortgage approvals from BBA;
• 15:00, German consumer climate index from Gfk for November;
• 16:30, Canadian corporate profits in Q3 of 2016;
• 20:15, SNB’s Zurbrugg to speak.

Technical Analysis:

Euro/ rate on the hourly. Source: TradingView dollar

Intraday forecast: minimum: 1.0522, maximum: 1.0558, close: 1.0538.

The strong US stats and growth in bonds pushed the euro to 1.0526. The week’s support at 1.0585 couldn’t hold. Now the sellers have opened the road to December’s 1.0517 minimum, after which they will head for 1.0462.

Today is a day off in the US. As such, today I’ve gone for a flat, but we should be prepared for sharp fluctuations due to low liquidity. The price is in the 112-135 degree inversion zone (1.0515 – 1.0490). The euro could drop to this zone with ease. Moreover, the D3 passes through 1.0495.