EURUSD: expect the price to recover to the LB balance line on Monday

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On Friday the 13^th of October, trading on the euro/dollar pair closed down. The day’s session turned out quite volatile due to the publication of September’s figures for consumer inflation and retail sales in the US, which came out worse than expected. The euro surged 70 pips on this weak data, but erased all its gains before the end of the day.

The US’s CPI grew by 2.2% in September against a forecast of +2.3%. Retail sales grew by 1.6% on the previous month against a forecast of 1.9%.

Day’s news (GMT+3):

• 12:00 Eurozone: trade balance (Aug);
• 13:00 Germany: Buba monthly report;
• 15:30 USA: NY Empire State manufacturing index (Oct);
• 15:30 Canada: foreign portfolio investment in Canadian securities (Aug), Canadian portfolio investment in foreign securities (Aug);
• 17:30 Canada: Bank of Canada business outlook survey;
• 21:00 Eurozone: ECB’s Lautenschläger speech;

Fig 1. EURUSD rate on the hourly. Source: TradingView

On Friday, weak US inflation data prevented sellers from reaching their target level of 1.1796. During the Asian session on Monday, the rate dropped to 1.1798. Sellers have completely recovered their losses. Today, I think that the zone from 1.1793 – 1.1796 will act as a support.

I’d like to stress that news developments are more important than technical signals. Assess the risks and set some protective stop levels accordingly so as not to be caught off guard by any developments. News can cause reversals very quickly, so in the case of insufficient free margin, you won’t be able to recover quickly enough before getting a margin call. If you don’t know what a margin call is, it’s probably best you stay away from the market for now.

Now let’s take a look at today’s forecast. A sideways channel has formed with boundaries 1.1800 and 1.1870. In Asia, the price is currently trading in the lower half of this range. Cycles and technical indicators point towards a price recovery to the LB balance line at 1.1837. I’m forecasting a rise in quotes to the 45^thdegree at 1.1852. The smaller the recovery, the stronger the fall will be. If we look at the daily chart, we can see that sellers have 1.1755 in their sights.