By Gabriel Ojimadu, Alpari
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On Thursday the 23rd of November, the US dollar index hit a monthly low of 93.07. Accordingly, trading on the euro/dollar pair closed up. Given the euro’s 57.6% weighting on the DXY, the EURUSD pair practically mirrors the index’s movements. The single currency was boosted by European data (German GDP and Eurozone business activity), as well as the US dollar’s weakness.
During the European session, the euro jumped to 1.1856. Since the US was celebrating Thanksgiving and exchanges were closed across the country, the euro spent the rest of the day at 1.1850 due to low trading activity.
Day’s news (GMT+3):
Fig 1. EURUSD rate on the hourly. Source: TradingView
Yesterday, I was expecting the euro to rise to the 112th degree with a subsequent retreat to the lower boundary of the B-B channel in the US session. The 112th degree stopped buyers in their tracks, but there was no drop to follow. In such a thin market, the pair consolidated within a narrow range around the 1.1850 mark until the session closed.
Free Reports:
On Friday, during the Asian session, the euro dropped to the lower boundary of the B-B channel, although since yesterday, this line has moved up from 1.1824 to 1.1837. Now, I’ve decided not to make a forecast given the contradictory situation on the pair. The euro continues to get support from the crosses, so it, along with the Aussie dollar, is trading up against the US dollar, while the other majors are trading down.
Buyers have gained a foothold at the 1.1861 resistance, which is formed from the 15th of November’s high. Given that the US trading day will be shorter than usual and that trading activity is set to remain at low levels, I reckon we’ll see a breakout of the B-B channel today. For me, the ideal situation would be a return to the LB balance line at 1.1818. Hourly cycles show the euro dropping over the next two days. The only thing propping up the euro is the crosses, and when they start to see a downwards correction, the euro will follow suit.