EUR/USD: euro ready to return to 1.0610

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On Tuesday the euro/dollar closed down. The weakening of the euro against the dollar was caused by a correctional phase for the euro/pound. The euro pound fell 98 points to 0.8665. The price corrected by 38.2% upwards from 0.8517 to 0.8763. The euro rate fell from a maximum of 1.0627 to 1.0556 (-71 points) against the dollar. In Asia the pair’s fall hastened to 1.0536.

Market expectations:

On Wednesday trader attention is on the press conference for the US’ new president. I didn’t want to make a forecast, but a really interesting picture has been forming on the hourly graph. The price could bounce from 1.0536 or 1.0519. I’ve gone for 1.0519. I reckon that before Trump speaks we will see a fall for the euro. Then we may see a test of 1.0610 (at 67 degrees and the trend line) which was broken yesterday.

Day’s news (GMT+3):

• 12:30, UK November production in the manufacturing industry, balance of trade, spending on construction and industrial production;
• 17:15, BoE’s Carney to speak;
• 18:00, UK Q4 GDP assessment from NIESR;
• 18:30, US changes in oil reserves for the week ending 8^th December;
• 21:00, Trump press conference.

Technical analysis:

Euro/ rate on the hourly. Source: TradingView dollar

Intraday forecast: minimum: n/a, maximum n/a, close: n/a.

Yesterday’s euro expectations came off. The price fell to the LB due to the euro/pound correction. So what can we expect from the euro today? The day will be unpredictable due to Trump’s press conference. Nevertheless, I’ve made a forecast for before the press conference.

The trend line was broken at 1.0564. In accordance with the break, the closest target is 1.0482.  The minimum from 5^th January is at this level (see graph). On the way down the sellers need to pass a few resistances: 1.0535, 1.0518 and 1.0498. These are the targets for the sellers today.

Using the cycles I’ve arrived at a bounce with a strengthening of the euro to 1.0610. The price could bounce from the current level or from 1.0519. I’ve chosen 1.0519. At the very least, the 90^th degree passes through it. The support is stronger than 1.0535. If the price lags in its growth from the forecast, it’d be better to give trading a miss today.