EURUSD: drop to the 45th degree likely

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On Tuesday the 24^th of April, trading on the euro closed up, breaking its 3-day losing streak. The main factor behind the euro’s rise was the US dollar’s universal decline. As the market underwent a technical correction, participants ignored the positive US housing and consumer confidence data. The euro then corrected to the 45^th degree at 1.2245.

The dollar’s correction may have been triggered by the failure of US10Y bond yields to gain a foothold above 3%. This level was tested today in Asia and there’s a risk of going up to 3.018%.

Day’s news (GMT+3):

• 09:45 France: consumer confidence (Apr).
• 11:00 Switzerland: ZEW survey – expectations (Apr).
• 14:30 USA: EIA crude oil stocks change (20 Apr).
• 23:15 Canada: BoC governor Poloz speech.

Fig 1. EURUSD hourly chart. Source: TradingView

After the release of weak German data, the euro recovered to the 45^th degree at 1.2245. In Asia, the dollar is trading up against all the majors. The dynamics on the euro crosses are mixed. Today’s economic calendar is fairly empty. For these reasons, today I expect to see a drop along the trend line to the 45^thdegree at 1.2190. If US10Y bond yields break 3%, we could hit a new low.