By Gabriel Ojimadu, Alpari
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On Monday the euro/dollar closed up. The price revived from a 1.0511 minimum to 1.0583. The yield for US bonds had a negative effect on the rate, as did the correctional movement after Friday’s strengthening on the back of the NFP (Friday against Monday). It’s also worth noting that there was a growth in the euro/pound cross which offered support to the euro bulls over the course of the trading day. The pound suffered due to concerns about a hard Brexit.
Market expectations:
In Asia the euro/pound is trading off the chart (above the U3). A serious downward correction of around 85 points to 0.8647 (currently: 0.8732) is near. The correction should start during the European session, but not necessarily. When the rate passes 0.8703, the downward movement will hasten for the euro/dollar. In accordance with my forecast, I reckon we’ll see a weakening of the euro to 1.0566 dollars. The economic calendar today is bare.
Day’s news (GMT+3):
- 14:00, US index for independent businesses in December from NFIB;
- 16:15, Canadian housing foundations laid in December;
- 16:30, Canadian construction permits in November;
- 18:00, US number of vacancies (excluding in agriculture) in November, wholesale reserves (definitive data) for November.
Technical analysis:
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Euro/ rate on the hourly. Source: TradingView dollar
Intraday forecast: minimum: 1.0566, maximum 1.0627 (current Asian), close: 1.0592.
Monday against Friday worked. The euro rate, including in Asia, rose to 1.0627. The upward movement stopped between the 90th and 112th degrees. The euro is up due to the growth in the euro/pound. Since the cross is in the U3, I expect to see a serious downward correction. In case of the cross switching to a correctional phase, pressure on the buyers in the euro/dollar will be compounded.
On Tuesday I expect a fall in the rate from 1.0625 to 1.0566. During trading in the States, the LB could pass through this level. Together with the 45th degree, the 1.0566-1.0576 zone should be a decent support for the buyers. If the downward correction for the cross is deep, the support won’t hold due to the correction that would take place. In this case, the price would shift south bound to 1.0528.
