By Gabriel Ojimadu, Alpari
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On Tuesday the 31st of October, trading on the euro/dollar pair closed slightly down. The price spent the day trading within a 36-pip range from 1.1625 to 1.1661. Euro bulls tried three times to induce a rebound from 1.1625 levels, but the price was dragged back to the balance line as the dollar was trading up against almost all the majors.
I still can’t understand what sellers were expecting given that the euro/pound cross fell and US bond yields rose. The Chicago PMI and the Conference Board consumer confidence index came out better than expected. This has created favourable conditions for a breakout of 1.1600.
Day’s news (GMT+3):
- 12:30 UK: Markit manufacturing PMI (Oct). This indicator has a strong influence on the pound when it deviates from expectations. It’s expected to come out at 55.9 against 55.9 the previous month.
- 13:00 UK: MPC member Cunliffe and Woods speeches.
- 15:15 USA: ADP employment change (Oct). This is expected to come out at 191,000 against 135,000 in September.
- 16:45 USA: Markit manufacturing PMI (Oct).
- 17:00 USA: ISM manufacturing PMI (Oct), construction spending (Sep).
- 17:30 USA: EIA crude oil stocks change (27 Oct).
- 21:00 USA: Fed interest rate decision and monetary policy statement. A rate hike is not expected.
- 23:15 Canada: BoC governor Poloz’s speech.
Fig 1. EURUSD rate on the hourly. Source: TradingView
Due to low seller activity, the euro’s upwards correction continues. The 67th degree is acting as a resistance for buyers. During trading in Asia, the price, having broken through 1.1638, exited the upwards channel. At the time of writing, the euro is trading at 1.1626 (-35). This marks a 0.14% drop against the dollar.
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Traders are proceeding with caution ahead of the upcoming Federal Reserve meeting in the US. However, there’s no need to worry about this meeting. It’s not one that will be accompanied by a summary of macroeconomic projections or a press conference with Janet Yellen.
In my forecast, I’m considering a drop for the euro to the 67th degree at 1.1580. This is an intermediate target. The main target is around the 1.1330 mark. We need to wait and see how quickly the price will make it to this level and what sort of trading volume sellers will witness.
