By Gabriel Ojimadu, Alpari
On Monday the 16th of October, trading on the euro/dollar pair closed slightly down. The pair spent most of its time in a sideways trend. After dropping to 1.1781, the euro recovered its lost ground to reach 1.1819. Still, the price didn’t make it to the balance line, which at that point ran through 1.1826 levels.
The price also missed the 45th degree as a result of pressure on the euro. This pressure is due to the situation regarding Catalonian independence. According to the Spanish government, Carles Puigdemont, the president of Catalonia, has yet to clarify whether or not he actually made an official declaration of independence from Spain last week.
After the formation of a three-wave upwards correction, euro sales have recommenced.
Day’s news (GMT+3):
- 11:00 Eurozone: ECB vice president Vitor Constancio’s speech;
- 11:30 UK: CPI (Sep), retail price index (Sep), PPI input (Sep), PPI output (Sep);
- 12:00 Germany: ZEW economic sentiment (Oct);
- 12:00 Eurozone: ZEW economic sentiment (Oct);
- 13:00 Eurozone: CPI (Sep);
- 13:15 UK: BoE governor Carney’s speech;
- 15:30 USA: import price index (Sep);
- 16:15 USA: industrial production (Sep), capacity utilisation (Sep);
- 17:00 USA: NAHB housing market index (Oct);
- 20:00 USA: FOMC member Harker’s speech;
- 23:30 USA: API weekly crude oil stock.
Fig 1. EURUSD rate on the hourly. Source: TradingView
Trading on the euro/dollar pair on Monday closed at 1.1796. This drop continued into the Asian session. The euro fell to 1.1767. The price missed the balance line by 6 pips before starting this drop. At the time of writing, the euro is trading at 1.1770.
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An inverse head and shoulders model is continuing to form on the daily timeframe with the neckline at 1.1662. The daily indicators are looking downwards. If the fundamentals don’t turn the market on its head, the price will be at the neckline within the next 2 days.
Next week’s ECB meeting is going to be a constant negative for the euro until it takes place. Euro bulls expect the regulator to announce the reversal of its QE program.
Today, I expect the euro to trade within the downwards channel, dropping to the 112th degree. Given that yesterday’s upwards correction didn’t amount to much, don’t be surprised to see some sharp rebounds today. The events calendar is pretty full, so high volatility is expected until trading closes in Europe.
