EUR/USD: all eyes on US GDP figures for Q4

Previous:

On Thursday, trading on the euro closed down. From the Asian high of 1.0766, the pair fell by 108 points to 1.0658. The American dollar underwent a correction after its fall on Wednesday due to the growing US bonds yields. This growth is also responsible for the euro’s slide. After the euro fell at the beginning of the American session, it was subsequently restored to 1.0704. After some sharp fluctuations, the pair’s volatility subsided and went into a consolidative phase.

The American statistics:

• The index of leading indicators in the US for December stood at 0.5% (forecasted: 0.5%, previous figure: 0.1%).
• 536,000 new homes were sold in the US in November (forecasted: 588,000, previous figure: 598,000).
• The number of unemployment benefit applications rose to 259,000 (forecasted: 247,000, previous figure: 237,000).
• America’s goods trade deficit rose to 65 billion USD (forecasted: 64.5 billion).
• The Business Activity Index (RMI) in the service sector stood at 51.1 (forecasted: 54.4, previous figure: 53.9).

Market expectations:

On Friday the 27th of January, traders’ attention will mainly be focused on the US’ GDP data for the 4th quarter, as well as the actions of the new administration. Upon knowing when the final figures will be published, we can expect a press release from the American government within a day.

In the final trading day of this week, I expect the euro to fall to 1.0637, followed by a bounce up to 1.0695. I think that in the coming days, the rate will fall within a range of 1.0614 – 1.0640.

Day’s news (GMT+3)

• 12:00 Eurozone – M3 money supply for December; private loans report for December;
• 16:30 USA – preliminary GDP growth data for Q4 of 2016; durable goods orders for December;
• 18:00 USA – revised figures for the Consumer Sentiment Index from the University of Michigan (January); revised figures on inflation expectations according to data from the University of Michigan (January);
• 21:00 USA – Baker Hughes operational US oil rig count.

EURUSD rate on the hourly. Source: TradingView

Intraday forecast: low: 1.0637, high: 1.0695, close: 1.0651.

The euro slid from its high of 1.0770 by 90 degrees. This degree is unimportant with regards to the euro. The rate can bounce, but inversions are rare. What happens more often, is that the rate falls to somewhere between the 112th and 135th degrees. The corresponding range in this case is from 1.0614 to 1.0640.

I’ve had to readjust the trend line, as the hourly candles closed above it. According to the forecast, prices are expected to recover to 1.0695 by 11:00 on the back of a correction of the euro/pound cross. During the American session I’m expecting the trend line to be broken. The price is unlikely to reach the 112th degree before the US releases its Q4 GDP growth data.

It’s worth noting that long positions exceed short ones. Now the market will do a number on consumers. They will be building up positions and the price will go down. According to the latest data from myfxbook, the short/long ratio is at 45/54, or 7982/9581 lots. I should warn you that it’s not a good idea to rely on this indicator completely. It’s greatly helpful as a general guideline, but no more than that.