Technical Analysis by Alpari

[Alpari]

Expected Euro Weakening to 1.1256 Before Yellen Speaks

EURUSD 1H

Yesterday’s Trading:

Falls in the stock and oil markets again offered support to the euro and yen. Brent fell to $30.26 and the euro/dollar fell to 1.1337. When the US indices stopped falling, a rally on the euro began: the euro weakened against the dollar to 1.1280.

Oil fell after the IEA (International Energy Agency) published a report in which the media saw the agency’s view as sceptical. “With the market already awash in oil, it is very hard to see how oil prices can rise significantly in the short term,” it noted.

Oil is trading at around $31 on Wednesday. The growth is 0.85% which isn’t much, but enough to stop the European indices from falling.

Main news of the day (EET):

• 
  
  
  • 11:30, UK industrial production and production in the manufacturing sector for December;
  • 17:00, UK GDP from NIESR for January;
  • 17:00, Yellen speaks;
  • 17:30, US Ministry for Energy oil reserve figures.

Market Expectations:

Market participant attention on Wednesday will be on Janet Yellen’s two-day speech before the banking committees of the Senate and the House of Representatives. Many expect her words to be neutral and not cause a spike of volatility on the financial markets. We expect to see a fall of the euro to 1.1256 before the US session opens. I’ve not taken Yellen’s speech into account in my forecast.

Technical Analysis:

• 
  
  
  • Intraday target maximum: 1.1311 (current Asian), minimum: 1.1256, close: 1.1295;
  • Intraday volatility for last 10 weeks: 102 points (4 figures).

In the first half of Wednesday I expect the euro to fall to the LB at 1.1256. Brent is trading up (+0.85%). The euro/pound is at the upper limit of the MA channel. The conditions are ripe for a correction.

Traders are used to the daily fall of the stock indices so I reckon that the indices will switch into a growth at market opening (a correction). This will have a negative effect on the euro. The US oil reserve report from the Ministry for Energy is out this evening. If Brent holds above $30, it’s likely the euro/dollar will begin a downward correction.

EURGBP 1H

The running from risk was caused by a rise in demand for euro throughout the market. After a fall to 0.7730. the euro/pound lifted above the U4. The price is now below the U3. The market is considered balanced when the price is at the LB. Due to this I expect a weakening of the euro to 0.7770 against the pound. A fall of the cross will put negative pressure on the euro/dollar.

Daily

The stock indices’ fall hastened and the euro/dollar rose to 1.1337. I set the target at 1.1370. A correction may start without reaching this target. All the more so since no one knows what Yellen is to come out with.

Weekly

The euro/dollar has neared the upper limit of the channel. The target is still 1.1366/70. The daily fall of the stock indices is supporting the buyers.

Vladislav Antonov, Alpari

 

[Alpari]

Expect V-shaped Model from Euro

EURUSD 1H


Yesterday’s Trading:
Yesterday was a volatile one. The euro/dollar first dropped to 1.1237 due to growth of the European stock indices. Then at 15:30 EET the euro renewed its minimum in response to the publication of the text of Fed chief Yellen’s report.
The text of the report was published an hour and a half before she made her speech. I think that it was done quietly in order to lessen tensions on the financial markets. A difficult task lay ahead of Yellen: she needed be soft enough with her words so as not to scare off market participants, but at the same time use strong enough words to show that the US economy is not in need of additional support. In the text there was nothing about interest rates, so the dollar’s growth was conservative.
Following the speech, at 17:00 EET Yellen answered questions from congressmen. As she responded the dollar fell along with the stock indices. By the end of the day, the euro had won back all of its losses against the dollar and the stock indices were in the minus zone.
Yellen was asked about negative interest rates, to which she replied that the Fed will not have to consider dropping rates into the negative.
Main news of the day (EET):

• 15:30, Canadian December housing price index and US initial unemployment benefit applications;
• 17:00, Yellen to speak.

Market Expectations:
Yellen is set to speak again today, but it’s not worth expecting high volatility like we saw yesterday. We’ve already had answers from Yellen. The calendar is empty, so the movements across key pairs will be set by movements on the stock indices.
Technical Analysis:

• Intraday target maximum: 1.1319 (current Asian), minimum: 1.1230, close: 1.1270;
• Intraday volatility for last 10 weeks: 102 points (4 figures).

I expect to see a V-shaped model from the euro on Thursday. Just as yesterday, but with less amplitude. There are concerns that the market will head in a different direction since the euro/pound is able to head straight for 0.7813 after yesterday’s 0.7712 bounce. I reckon we’ll see a strengthening of the euro against the pound via a bounce to 0.7736. Here we again need to see how the European stock markets open. If it’s with a growth then the euro/dollar will fall. If they open down then it will rise. An ideal situation would be one where we have movement along 1.1260 before Friday.

EURGBP 1H

Due to the growth in the stock indices and the correction on other crosses, the euro/pound fell to 0.7712. The price has returned to the LB. I expect to see a fall to 0.7736 and then a rise to 0.7790. The rate could head up if the European stock markets open down and don’t go positive over the course of the day.

Daily

The euro/dollar fell to 1.1160 and closed at 1.1289 on Wednesday. After Yellen spoke, a long shade formed which indicates a continuation of euro growth. In order for the bull signal to be nullified, the sellers need to close the day below 1.1215.

Weekly

The target is still at 1.1366/70.

Vladislav Antonov, Alpari

 

[Alpari]

Euro Ripe for a Bounce

EURUSD 1H


Yesterday’s Trading:
Thursday saw the market swinging all day before the yen bounced from 111 by 190 points. It was a day off in Japan, so there was no comment from the BoJ. I think that the bank made an intervention through its dealer because the price doesn’t move from the place it has been sat for three hours for no reason.
Due to a fall in the stock indices, the euro/dollar reached 1.1376. By the end of the day the rate returned to 1.1315. Janet Yellen had nothing new to say. The US indices closed the day down.
Main news of the day (EET):

• 09:00, German CPI for January and GDP for Q4;
• 12:00, Eurozone industrial production data for December and GDP for Q4;
• 15:30, US January retail sales;
• 17:00, US consumer confidence index from Reuters/Michigan for February, FOMC member Dudley to speak.

Market Expectations:
The euro/dollar is trading by the balance line on the hourly at 1.1297. A candle with a long upper shade and a bullish body has formed on the daily. Due to this, we need to wait for the confirmation. A close of the day below 1.1286 will see a euro sales signal with a 1.1200 target form. If the euro fall is accompanied by a fall in gold below 1120, we will be heading beneath 1.1080. Today’s news worth a look includes the GDP figures from the Eurozone and Germany for Q4.
Technical Analysis:

• Intraday target maximum: 1.1333 (current Asian), minimum: 1.1240, close: 1.1265;
• Intraday volatility for last 10 weeks: 102 points (4 figures).

The current euro/dollar quote is 1.13. The euro is balanced on the hourly. The dollar is strengthening after yesterday’s weakening against secure assets. The US indices are down slightly, so it’s likely that Europe will close up. Moreover, Brent is up to $31.70. If the indices head north, the euro will head south. A correctional movement before the weekend will begin.

EURGBP 1H

the stock indices, the euro/pound has reached the U4. The price returned from here to the LB as we saw on 9th February. In my forecast I’ve gone for a weakening of the euro to 0.7758. If I’m right about the direction of the pair, my scenario for the euro/dollar will come off.

Daily

An inverted candle formation is visible on the daily. The 1.1370 target along the upper limit of the channel has been taken. There’s just a close of the day below 1.1286 left. After this we can consider a fall of the euro to 1.1200 and then to 1.1080. If the day close above 1.1286, ready yourself for a strengthening of the euro to 1.1471/75.

Weekly

The target was reached. Now we need to wait for the week to close. It’s better to partially fix profit on long positions. If the day closes above 1.1286 we can sit it out to 1.1470.

Vladislav Antonov, Alpari

 

[Alpari]

1.0930 Target for Euro/Dollar

Trading Yesterday:

The euro managed to sit at 1.0850 throughout the first half of Wednesday. After the February ADP data came out better than expected, the euro came under another wave of sales. Employment in the US private sector rose by 214,000 compared with a forecasted 190,000 and 193,000 in January. The report offered short term support to the dollar.

The driver weakening the euro was the euro/pound which fell by 120 points to 0.7690. The GDP/USD managed to avoid a fall and reach a maximum for the week due to the euro falling. The euro/pound fell by 120 points and the pound dollar rose by 170 points to 1.4092.

Main news of the day (EET):

• 11:30, February business activeness indices in the service sector for the UK;
• 12:00, Eurozone January retail sales changes;
• 15:30, US initial unemployment benefit applications;
• 16:45, US Markit service sector activity index for February;
• 17:00, US ISM business activity index in service sector and data on manufacturing orders for January.

Market Expectations:

The bearish set up on the euro continues, but I believe that we could see a strengthening of the euro against the dollar on Thursday as part of a correctional movement, following the pound/dollar and Australian/American dollar pairs. Trader attention will be on the publication of data regarding business activity in the service sector in different parts of Europe and the US.

Technical Analysis:

• Intraday target maximum: 1.0930, minimum: 1.0845, close: 1.0900;
• Intraday volatility for last 10 weeks: 103 points (4 figures).

This morning the euro was trading at around 1.0845. The price is at the balance line. This means that the market is balanced on the hourly and that the price is readying to stray from the LB by 0.6% or 1%.

The pound/dollar has risen by 270 points over the past three days and the euro has fallen by 60 points in this time. The time has come to reduce the gap between the pairs. As soon as the euro/pound starts to correct, the euro will quickly win back its losses due to the general weakening of the dollar. We will see it reach at least 1.0960.

EURGBP 1H

Yesterday I expected to see a rise in the cross to 0.7820. The euro strengthened against the pound to 0.7812 due to a weak UK construction sector PMI. In the second half of the day the sellers broke the support zone and brought the rate to 0.7690.

The trend line on the hourly runs through 0.7760. After a four-day fall, I expect an upward correction to the trend line. I am not looking at the news since the pound has been strengthening against the dollar (by 270 points) with weak UK stats. I believe that the euro could move by at least one figure without any news.

Daily

On Wednesday the euro/dollar shifted the weekly maximum to 1.0825. Two daily candles with long shades have formed. They are not so large, but indicate a slowing of the euro weakening. The stochastic has formed a euro buy signal. The CCI indicator is readying to cross the -100 line. I am sure that many traders have set Buy Stops on the euro at the maximum. I expect a rebound to 1.0960.

Weekly

I am waiting for the NFP on Friday and the candle for the week to close.

 

[Alpari]

Expected Bounce to 1.0925 Before Payrolls​

EURUSD 1H

Yesterday’s Trading:

The currency market on Thursday saw the closing of long positions before data on the US labour market came out. The euro/dollar rose from 1.0853 to 1.0972 (+120 points) This euro/dollar growth was expected since the dollar had strengthened significantly against the pound and Aussie dollar the three days prior.

Pressure on the rate came from US service sector data and initial unemployment benefit applications. Markit’s business activity index fell from 53.2 to 49.7; below the key marker of 50. ISM’s index fell from 53.5 to 53.4. The employment index fell from 52.1 to 49.7 which is key before the NFP.

Initial unemployment benefit applications in the US for the week stood at 278k (forecasted: 272k, previous: 272k).

Main news of the day (EET):

• 15:30, US NFP and changes in hourly wages for February. Simultaneously, the US and Canada will be releasing their Trading Balances for February;
• 17:00, Canadian Ivey PMI for February.

Market Expectations:

The key event for Friday is the NFP.

Technical Analysis:

• Intraday target maximum: n/a, minimum: n/a, close: n/a;
• Intraday volatility for last 10 weeks: 103 points (4 figures).

The euro/dollar rose to the U3 and stopped at the 130th Gann gradient. At 6:32 EET, the euro/dollar was trading at 1.0945. If we look at the daily, we see that the euro has reached a strong support zone: 1.0985-1.0990. If the NFP comes out above 220k, the euro will return to 1.0855. If it’s lower then we should expect a rise to 1.10550-1.1070. Any higher is anyone’s guess since the ECB is meeting on 10th March and it is expected that they will drop their deposit rate.

EURGBP 1H
My expectations for the cross came off in full. The euro/pound returned to the trend and balance line. I think that the price will remain under the trend until the NFP is out.

Daily
On Thursday the euro/dollar saw the closure of short positions and a restoral of the price to the LB. The indicators are continuing to show a rise in the pair but the NFP will have the last say.

Weekly
After yesterday’s strengthening of the euro, the weekly is seeing an inverted candle form on it. Let’s wait and see what the NFP and the close of the week brings.

 

[Alpari]

Expected Sideways on Euro

Yesterday’s Trading:

Tuesday’s American session saw the euro bulls managing to shift the maximum to 1.1057 using support from the euro/pound cross. The euro/pound rose to 0.7792. The euro received support in the cross from the release of positive statistics in the Eurozone. Eurozone GDP for Q4 of 2015 and industrial production in Germany came out better than expected.

According to preliminary data, the Eurozone economy in Q4 grew by 0.3% QoQ and 1.6% YoY against an expected 0.3% QoQ and 1.5% YoY. The previous value was reassessed from -1.2% to -0.3%. .

By the close of the day, the euro had lost its gains and was at 1.10. Pressure on the currency came from risk fleeing and the approaching ECB meeting on Thursday.

Main news of the day (EET):

• 11:30, UK industrial manufacturing, production in the manufacturing industry for January;
• 17:00, Bank of Canada interest rate decision and announcement;
• 17:30, US oil reserve report from Ministry for Energy;
• 22:00, Reserve Bank of New Zealand interest rate decision and announcement;
• 22:05, RBNZ press conference.

EUR/USD 1 H

Market Expectations:

The euro/dollar in Asia was down to 1.0968. The euro is still under pressure since market participants are expecting the ECB to undertake further stimulative measures. Taking the technical factors on the hourly into account, with trade opening in Europe we can expect a rise to 1.1020 and a close of the day around 1.0987.

Technical Analysis:

• Intraday target maximum: 1.1023, minimum: 1.0960, close: 1.0987;
• Intraday volatility for last 10 weeks: 103 points (4 figures).

The trend line was broken during the Asian session. The euro/dollar fell to 1.0968. The support runs through 1.0952. If the euro/pound cross continues to fall, it’s likely a rebound will take place at 1.0952. Taking into account that bull divergence has formed, I expect to see a strengthening of the euro to 1.1020 in the first half of the day. Then we can ready ourselves for the ECB decision and Draghi’s press conference.

EUR/GBP 1 H

Five days with the euro/pound trading sideways in a 70 point range have gone by. Yesterday’s positive Eurozone and German data lifted the rate to 0.7792. From here the price returned to the LB. I reckon that the pair will stay trading 0.7720-0.7793 until Thursday. It’s worth banking on a depart from the price range after the ECB makes clear its decision.

Daily

On Tuesday the day closed neutral. Yesterday’s minimum was broken this morning. Euro buyers should be on the alert for bear signals on the stochastic. An inversion is in its development stage on the lesser timeframes. The euro will remain under pressure until the ECB convenes. I’ll make my conclusions on Friday after I’ve heard what Draghi has to say.

Weekly

I’m not going to bother making comment on the weekly graph until tomorrow. The resistance sits at 1.1075/80.

 

[Alpari]

Expected Sideways for Euro

Yesterday’s Trading:

The first half of Friday saw the euro down against the dollar significantly. However, by the end of the trading session in Europe, everything was back to how it was. The euro/dollar broke from the 112th gradient at 1.1079. Due to an empty calendar, the mood of the players was set by European and American share prices.

Market Expectations:

This week market participants will be waiting for the central banks to convene: Japanese, American and Swiss. The Fed FOMC meeting is the key event of the week.

The euro/dollar is trading around 1.1157 in Asia. The economic calendar is empty. It’s unlikely that the data for industrial production will have any real effect on the euro. I expect to see the daily candle form like a Doji on Monday (close of the candle at the same level as opening).

Day’s News:

12:00, Eurozone industrial production for January.

21:00, RBNZ governor to speak.

Technical Analysis:

Intraday target maximum: 1. 1210, minimum: 1. 1130, close: 1. 1165.

Intraday volatility for last 10 weeks: 103 points (4 figures).

The week closed up for the euro above 1.11. This leads me to believe that the euro will continue to strengthen against the USD. The closest resistance is at 1.13 on the daily timeframe. I expect a correction to the LB on Monday.

Vladislav Antonov, Alpari

 

[Alpari]

Euro/Dollar Stabilised at 1.11 Before FOMC

Yesterday’s Trading:

On Tuesday the euro/dollar spent the day in a sideways trend with a 50 point range. The euro received support from the euro/pound which was up sharply after the publication of a survey by the Telegraph.

The survey showed that 49% of those asked would like the UK to leave the EU, with 47% saying they would prefer to remain in the union. 823 people took part in the survey and it was held by telephone between 11th and 14th March of this year. The referendum is planned for 23rd June. Surveys are a decent instrument to manipulate exchange rates as results constantly change.

US statistics came out ambiguous. Retail sales were better than expected, but the previous was reassessed down. The New York business activity index was better than expected. The YoY growth in the base PPI is also worth a mention. The euro/dollar stabilised at 1.11.

Market Expectations:

Today’s market attention is on the FOMC meeting outcome. It’s expected that the Fed will keep interest rates unchanged. After the meeting there will be a press conference with Janet Yellen. If she comes out with anything surprising about the economy and the perspectives for a growth in rates, the dollar will strengthen by the day’s end and the euro will fall. Any hint at the Fed putting off a rate hike or a loosening of monetary policy will cause a fall in the dollar throughout the market.

Before 20:00 EET I expect to see a continuation of the sideways. Keep an eye on movements of the euro/pound. The rate is by the U3 line. After yesterday’s rally, it could switch into a correctional phase and cause a wave of euro sales against USD.

Day’s News (EET):

11:30, UK February unemployment benefit applications, ILO unemployment figures for January and average salaries.

14:30, Canadian changes in manufacturing deliveries and operations with foreign securities in January. US foundation laying and construction permits for February, in addition to February CPI. UK year’s budget.

15:15, US industrial production for February.

16:30, US changes in oil reserves from Ministry for Energy.

20:00, US interest rate decision, economic forecast and FOMC announcement.

20:30, FOMC press conference.

Technical Analysis:

The euro/dollar has stabilised at 1.11 under the LB. Before the Fed decision we can expect to see a sideways at the current level.

Could the euro stray off wildly from its current level before 21:00? It could well do. Announcements from representatives on rates, surveys, rumours, a thin market before important data: all these factors could cause real fluctuation.

 

[Alpari]

Fed Gives Dollar a Smack

Yesterday’s Trading:

The USD on Wednesday weakened throughout the market. The Fed decided to keep their interest rate at 0.25-0.50%. It was announced that the rate is to be raised twice this year, and not four times as was said earlier. It is this that caused a sharp fall of the dollar.

The Kansas Fed president George voted to lift rates by 0.25%, with the other 9 voting to keep things unchanged. The forecast for the economy and inflation was dropped. After Yellen spoke, experts began saying that the Fed is setting things in motion for rates to be dropped.

US stats came out mixed. The US industrial production index for February stood at -0.5% (forecasted: -0.1%, previous: 0.8%).

The US CPI for February was -0.2% (forecasted: -0.2%, previous: 0.0%). The CPI which doesn’t take food and energy prices into account for the month was 0.3% (forecasted: 0.2%, previous: 0.3%).

Housing construction in the US for February stood at 1.178 million (forecasted: 1.153 million, previous: 1.120 million). There were 1.167 million construction permits issued (forecasted: 1.205 million, previous: 1.202 million).

Market Expectations:

On Thursday the key event of the day for the currency market is the Bank of England’s meeting. The bank is set to keep its interest rate and asset purchases at previous levels. No surprises are expected. I reckon the euro/dollar pair will continue to rise to 1.1280.

Day’s News (EET):

12:00, Eurozone February CPI and January balance of trade figures.

14:00, BoE interest rate and asset purchasing decision, along with BoE minutes.

14:30, US balance of trade for Q4, initial unemployment benefit applications and Philadelphia Fed PMI for March.

Technical Analysis:

Intraday target maximum: 1.1280, minimum: 1.1205 (current Asian), close: 1.1255.

Intraday volatility for last 10 weeks: 103 points (4 figures).

After the Fed meeting, the euro/dollar headed above the U3 (upper limit of the MA channel). This line will keep the euro from strengthening further. To shift higher, we will need to see the rate hold at its current level for 6 hours. The MA line is facing upwards, so in 6 hours the road to 1.1280 will open up.

 

[Alpari]

Expected Euro Fluctuations in 1.1250 – 1.3335 range

Yesterday’s Trading:

The euro/dollar on Friday closed down. The ECB’s head economist Peter Praet hinted at a possible extension of their current monetary stance. The euro found a support at 1.1255. From here the rate restored to 1.1306. US stats helped it to restore to this level. The strengthening underwent some interference from the euro/pound which had fallen from trade close in the US.

Preliminary figures for US consumer confidence in the university of Michigan’s index for March stood at 90.0 (forecasted: 92.2, previous: 91.7).

Market Expectations:

Today is Monday: correction day. There isn’t much news out. We could even say that the economic calendar is empty. There are no drivers for sharp fluctuations on the key pairs. By the end of the day we should see the EUR/USD at 1.1290.

Day’s News (EET):

13:00, UK industrial order data.

16:00, US February housing sales in the secondary market.

17:00, Eurozone March consumer confidence index.

18:00, FOMC member Lockhart to speak.

Technical Analysis:

Intraday target maximum: 1.1305, minimum: 1.1250, close: 1.1290.

Intraday volatility for last 10 weeks: 103 points (4 figures).

The euro/dollar has returned to the LB from the U3. The euro/dollar on the hourly is balanced. Since the oscillator stochastic is up and the AO is down, I first expect the euro to fall to 1.1250 and then to rise to 1.1305. The fluctuations should occur in a 1.1250 – 1.1335 range.

 

[Alpari]

Expected Euro Correction to 1.1350​

Yesterday’s Trading:

The euro on Friday updated the week’s maximum due to demand for the currency in the cross pairs. After the release of strong American labour market data, the buyers’ position began to waver. The euro weakened against the dollar by one figure to 1.1334 on the news and from here it was snapped up. Trades closed slightly up.

Job creation in the US during March stood at 215k (forecasted: 205k). January’s figure was reassessed from 172k to 168k and February’s from 242k to 245k. Unemployment was up 0.1% to 5.0% (forecasted: 4.9%, previous: 4.9%). Average hourly earnings for the US in March were up 0.3% (forecasted: 0.2%, previous: -0.1%).

Market Expectations:

On Monday I don’t bother looking at the planned economic data. On my forecast I’ve gone for a weakening of the euro against the US dollar to 1.1350 due to a downward correction of the euro/pound cross.

Until the price drops below 1.1334 (Friday’s minimum) a fall to 1.1350 will be seen as a correction against the growth from 1.1143 to 1.1437.

From 1st April, the ECB extended its QE program in which it will purchase bonds, including corporate ones. The Bank’s actions will have a negative effect on the euro.

Day’s News:

• 11:30, UK business activeness index in the construction sector for March;
• 12:00, Eurozone February unemployment;
• 17:00, US manufacturing orders for February and labour market conditions for March;
• 17:30, Bank of Canada quarterly review of economic conditions and business development prospects.

Technical Analysis:

A double bear divergence has formed on the hourly. The target on it is 1.1310. Along the way the sellers will meet an important level: 1.1350. If they are able to strengthen below it, then 1.1310 will not hold. Closing of long positions in the crosses will only worsen the situation in the main pair. As a result, the euro will crash like the pound. Today’s target is 1.1350, then we will have a look at the situation.

 

[Alpari]

Expanding Formation Appeared​

Yesterday’s Trading:

The euro/dollar on Thursday closed down. The euro weakened against the US dollar after the publication of minutes from the ECB’s March meeting. The minutes indicated an inclination of relaxing further their monetary policy.

The euro met the support at 1.1337 (90 degrees) and then the price returned to 1.1385 (LB). There was no reaction from traders to the chiefs of the ECB and US Fed speaking. When trading finished in Europe, the pair switched into a sideways.

Market Expectations:

The calendar for Friday is pretty much empty. A spike of volatility via the euro/pound cross is possible when the UK stats come out. On my forecast I’ve gone for a sideways for the euro along the balance line with an average price of 1.1375 for the last 55 hours.

Day’s News (EET):

• 11:30, UK balance of trade, manufacturing production, manufacturing production in the manufacturing industrial sector for February.
• 15:15, Canadian new foundations lain in March, 15:30, employment changes and unemployment level for March.

Technical Analysis:

For the past two trading days the 1.1334 – 1.1437 price range was expanded from 01/04/16 to 1.1326 – 1.1453. As a result, an expanding formation which is similar to a diamond has appeared. If it is such a pattern, we should now see the right side converging. This means that it’s not worth lifting above 1.1420 and dropping below 1.1330. Today I’m limiting myself to a 1.1345 – 1.1400 range.

Also, keep an eye on the movements of the euro/pound. If the rate falls below 0.8044, the euro dollar will shift to 1.1320. As I said above, the swings on the cross could start coming about at 11:30 when the UK stats come out.

 

[Alpari]

Euro/Dollar: Target – 1.1375​

Yesterday’s Trading:

The euro closed up against the US dollar on Friday. The European and American calendars were empty, so market participants were focussing on stock market, bonds and oil market movements.

The European and American stock indices closed up. Brent was up to $41.97. The euro dollar restored to 1.1417.

Market Expectations:

The calendar is empty again today, so traders’ attention is focussed on Dudley and Kaplan speaking during the American session. Since today is Monday (correction day), my forecast goes against Friday’s movements. I expect to see a correctional movement towards 45 degrees (1.1372) for the EURUSD.

Day’s News:

This evening, finance minister Jacob Lew and Fed representatives Dudley and Kaplan are to speak.

Technical Analysis:

Brent has shifted Friday’s maximum to $42.36. The euro/dollar followed oil in updating its maximum. The rate at 06:33 EET was 1.1407 against an Asian maximum of 1.1425. The euro is trading close to the balance line. Since the calendar is empty, on my forecast I’ve gone for a weakening of the euro to 1.1370-1.1375.

Keep an eye on the movements of the euro/pound cross. A triangle has formed on the hourly and the price could leave it in any direction. I expect to see it leave downwards, creating pressure on the euro in its pair with the dollar.

 

[Alpari]

Euro Weak and Could Return to 1.1370​

Yesterday’s Trading:

On Monday trades in Europe finished around the level that the Asian session opened at. During the first half of the day the euro weakened against the dollar to 1.1371 due to a sharp fall in the euro/pound cross. There was no news to strengthen the pound. The dealers reckon that the demand for pounds was caused by one big order. Maybe.

In the second half of the day the euro strengthened due to the general weakness of the dollar which, in my opinion, was caused by oil price movements. Before the meeting in Doha, Brent rose to $43.03. Following the rise in oil price, the Canadian dollar rose. The euro/dollar restored to 1.1447 and closed the day at 1.1405.

Market Expectations:

The euro/dollar is continuing to trade in a seven-day range of 1.1326-1.1453. The euro/pound is readying to fall to 0.7963. Consequently, in the first half of the day we could see a repeat of yesterday.

Germany is publishing its definitive March CPI and the US is releasing import/export prices today. This evening Fed representatives Williams and Lacker are set to speak. In my forecast I’ve gone for a sideways in a 1.1365-1.1420 range.

Day’s News:

11:30, UK CPI, RPI and PMI for March;

15:30, US import prices for March;

16:00 FOMC’s Harker to speak;

21:00, US federal budget balance for March;

22:00, FOMC’s Williams to speak;

23:30, FOMC’s Lacker to speak;

23:35, API’s weekly oil reserve report.

Technical Analysis:

We see a 17-hour correction in a narrow range on the euro/pound. If the euro can’t manage to strengthen against the pound, ready yourselves for a break in 0.7994. The closest support runs through 0.7665. A fall in the cross will cause a fall in the euro/dollar. However, since oil isn’t losing value, in the second half of the day the euro could get back all of its losses from the first half of the day. We want to see a close of the day near the LB at 1.1395.

 

[Alpari]

Euro Stuck in a 1.1326-1.1464 Range​

Yesterday’s Trading:

The euro/dollar has been in a sideways since April Fools’ Day. All of the daily candles are similar to dojis with long shades for these days. The mixed dynamic of the pair yesterday was caused by a rise in oil prices and because of what Fed representative Harker had to say.

Oil was up to $44.78 due to rumours that Russia and Saudi Arabia have reached a consensus as to freezing oil output. There was no confirmation of this from officials. Harker announced that the Fed could raise rates three times this year if inflation speeds up.

The euro/dollar closed at 1.1383 and was treading near the LB in the middle of a 1.1326-1.1464 range in Asia.

Market Expectations:

On Tuesday the API oil reserve report came out before the daily candle closed. US oil reserves were up 6.2 million against the previous week’s fall of -4.3 million. Brent dropped to $44.11 on this news. It was an insignificant fall in the quotes for the rise in reserves due to market participants’ attention being firmly focussed on the OPEC meeting in Doha. We could say that Brent in Europe is in any case set to test $45 and after which we would see the start of a correction.

The key event of the day is the Bank of Canada’s (BoC) press conference. The hourly indicators are down and aren’t contradicting euro purchases in the first half of the day. The euro is expected to close at around 1.1380.

Day’s News (EET):

12:00, Eurozone changes in industrial production for February;

15:30, US changes in retail trade and PMI for March;

17:00, BoC interest rate decision and monetary policy report;

17:30, US oil reserves from Ministry for Energy;

18:15, BoC press conference;

21:00, US Beige Book.

Technical Analysis:

The euro/dollar has been in a sideways trend with a 1.1394 average for 8 days. A break in the lower limit of the range at 1.1326 will open up the road to 1.1250 for the sellers. We need to prepare ourselves for a weakening of the euro. The 1.1396/1.14 levels will be Wednesday’s resistance. Expect some swings during the American session during the BoC press conference and when the US Ministry for Energy oil report is released.

 

[Alpari]

Euro/Dollar Stabilised at 1.1260​

Yesterday’s Trading:

On Thursday the euro/dollar was touching the support at around 1.1233. Bouncing off the 135th gradient, the euro at one moment rose to 1.1294 after the Bank of England convened. The euro bulls were stopped going further by the US stats. So they had to drop to 1.1260. The euro is trading at this level now. The Asian participants even ignored the Chinese stats this morning. It’s possible that the news will have its effect later on.

The US data showed a fall in unemployment benefit applications. Consumer inflation was worse than expected. This data could reduce the chances of interest rates being raised.

The number of US unemployment benefit applications for the week was 253k (forecasted: 270k, previous: 266k).

The US CPI in March was 0.1% (forecasted: 0.2%, previous: -0.2%). The CPI without food and energy was 0.1% (forecasted: 0.2%, previous: 0.3%).

Market Expectations:

The euro/dollar is stable in a 1.1247-1.1275 range. Since the MA line is heading down and the price is under the balance line, in the first half of the day I expect a weakening of the euro to 1.1230. If the euro/pound falls from 0.7955 to 0.7905. the minimum will shift to 1.1215. There’s no important data out in Europe. In the forecast I’ve gone for a V-shaped pattern.

Day’s News:

11:30, UK construction in February;

12:00, Eurozone February balance of trade;

15:30, Bank of Canada February industrial sales;

15:30, US New York Fed business activity in manufacturing for April;

16:15, US industrial production for March;

17:00, US preliminary consumer confidence from Michigan university for April.

Technical Analysis:

The euro has been trading sideways for fifteen hours. The balance line heads through 1.1283 so there is a risk that it will drop to this level before trading opens in Europe. Only, if the euro rises above 1.1295, it’d be worth staving off sales of the currency until Wednesday. A proper break in yesterday’s minimum of 1.1233 with support from the euro/pound cross will open the road to 1.1170 for the sellers. Today is Friday and so before the weekend anything could happen.

 

[Alpari]

Expected Sideways for Euro​

Yesterday’s Trading:

Economic data from the US on Friday was ambiguous, allowing the euro/dollar to rise to 1.1316. The New York business activity index exceeded expectations. The index for industrial production and the university of Michigan’s index were worse than expected.

The index for business activity from the federal reserve bank in New York was 9.6 for April (forecasted: 2.21, previous: 0.62).

The index for industrial production in the US for March was down 0.6% MoM against a forecasted 0.1% fall (previous: reassessed from -0.5% to -0.6%). The Michigan index for consumer confidence was 89.7 against an expected 92 and a previous 81.

Market Expectations:

Trading on Monday opened up for the dollar against commodity currencies. On Sunday in Doha negotiations regarding a freeze to oil output collapsed. The main reason for this was the lack of an Iranian representative present. The next OPEC meeting will take place in Vienna in June.

Brent fell 4.6% to $41.04. The euro/dollar opened up, but then followed the rest down and returned to 1.1275. The price is near the LB, indicating the balanced nature of the pair on the hourly and the readiness of the market to go astray. Since today is Monday – day of correctional movement – on my forecast I’ve gone for a sideways movement above the LB.

Day’s News (EET):

13:00, monthly Bundesbank report in Germany;

15:30, Canadian data on foreign securities transactions in February;

15:30, New York Fed’s William Dudley to speak;

17:00, NAHB April housing market index.

Technical Analysis:

Since the AO indicator is in the positive, I expect to see an update of the Asian minimum. If we make an upwards channel, then we see that the price should remain above 1.1267. Since today is Monday, there’s no point going deep into the technical analysis.

 

[Alpari]

Euro Corrects 38.2% to 1.1464 – 1.1233 Wave​

Yesterday’s Trading:

Due to a restoral of oil prices and a weakening of the USD, the euro/dollar on Monday lifted to 1.1331. Trades ended at 1.1312. The oil market pretty much fully found a way to win back the morning’s losses following OPEC’s failed meeting in Doha. A rise in the price of oil was made possible by worker strikes in the oil industry in Kuwait. 13,000 people are protesting against a reduction in wages and social benefits. Kuwaiti oil production fell by 1.7 million barrels per day to 1.1 million barrels.

Market Expectations:

The euro/dollar in Asia is trading at 1.1322. The euro is strengthening against the Japanese yen and falling against the GBP. Therefore the sterling in its pair with the dollar is pushing the euro up.

As part of an upward price channel, I wouldn’t count out a rise of the euro/dollar rate to 1.1350. I reckon the euro will weaken from 1.1340 and the 90th degree, although this level won’t be the key resistance. The euro often disappoints from the 112-135 degree zones. At the moment, the 112th degree runs through 1.1365.

Of today’s news, it’s worth circling the speeches of the three governors: Stevens, Carney and Poloz. Only they know what they are going to say so trying to take their speeches into account in a forecast is useless.

Day’s News (EET):

11:00, Eurozone balance of payments in February;

12:00, German and Eurozone ZEW April economic sentiment indices;

15:30, US construction permits issued and foundations lain in March;

16:30, RBA governor Glen Stevens to speak;

17:35, BoE governor Carney to speak;

18:00, BoC governor Poloz to speak.

Technical Analysis:

For three trading days the euro/dollar has corrected 38.2% to the downward 1.1464 – 1.1233 wave. The 50% level runs through 1.1348. I think we’ll see a return of the price to the LB from 1.1340/45. The support passes through 1.1295 in Europe and 1.1300 in the US.

 

[Alpari]

Cheapening Oil to Pressure the Euro​

Yesterday’s Trading:

The euro/dollar broke through the 1.1340 marker due to a revival of the euro/pound cross and weak US stats. Data on construction in the US turned out worse than expected, provoking renewed speculation as to whether the Fed will decline to lift interest rates in the coming time.

The euro/dollar reached 1.1384. The strengthening of the euro against the dollar stopped between the 112th and 135th degrees at the 61.8% fibo level from the downward wave with a 1.1464 maximum to 1.1233.

Market Expectations:

On Thursday the ECB is set to convene and Draghi will hold a press conference. As this event approached, yesterday I expected the euro to weaken to 1.1330. I looked at a depart of the price down through the double peak, but it seems there will be no repeat touch of 1.1384.

US oil reserve data from the API came out last night. Reserves were up 3.1 million barrels against an expected 1.6 million rise. Brent in Asia fell 1.9% to $43.09. Other than the API report, in Kuwait the workers’ strike which has been supporting oil quotes since Monday came to an end.

Oil is falling in price, and with it the euro. I reckon that a return of the rate to 1.1300-1.1330 before the ECB convenes will be an excellent scenario.

Day’s News (EET):

09:00, German March PMI;

11:30, UK average wage changes and number of unemployment benefit applications in March. Unemployment level for February.

17:00, US data on sales in the secondary housing market for March.

17:30, US changes in oil reserves from the ministry for energy.

Technical Analysis:

At 07:11 EET, the euro/dollar was trading at 1.1363. Taking the rise of the euro/pound into account, I expect a weakening of the euro from 1.1380-1.1384. The euro will receive support from the fall in oil via the euro/Canadian and euro/Australian crosses. If the USD in Europe switches into attack, these crosses will not help the euro strengthen. As soon as 1.1350 is broken, pressure on the euro will compound.

In yesterday’s analysis I wrote that the 90th degree isn’t an important support. The euro often disappoints from the 112-135 zone. The 135th degree passes through 1.1393. If demand for the euro remains high in the crosses, it’s likely that there will be a growth of the euro/dollar to 1.1393. I’ve no intention of buying euro before Draghi’s press conference.

 

[Alpari]

Pinbar Formed on the Daily​

Yesterday’s Trading:

On Thursday the outcome of the ECB convening were three rates left at their former levels. The key refinancing rate remained at 0.00%, the rate for deposits was left at 0.40% and the ECB credit rate was left at 0.25%. Their asset purchasing program remained at 80 billion euros per month.

After the ECB’s decisions were made public, the euro/dollar rose up a little to 1.1350. At the beginning of the press conference it rose further to 1.1397. Draghi spoke about the improving financial conditions and credit situation in the region. But this is where the buck stopped. The tone of his speech became darker. The head of the central bank expressed worries about the UK leaving the EU and the return of deflation with regards to consumer prices. He said that the rates will remain low for an extended period of time even after QE has ended.

Following the press conference, the euro/dollar rate fell 129 points to 1.1268.

Market Expectations:

On the daily time frame a pinbar has formed (see graph below). After such candles, the market often bounces by 61.8% and even updates the maximum. So, taking into account that today is Friday, I would be careful with my sales at the current levels. In the first half of the day I expect the euro to bounce to 1.1334/40. Close I expect to see around the balance line region.

Day’s News (EET):

10:00 – 11:00, business activity indices in industry and services for Germany, France and the Eurozone in April;

15:30, Canadian March CPI, retail sales in February;

16:45, US preliminary industrial business activity data for April;

20:05, US extraction rig data from Baker Hughes.

Technical Analysis:

As I said above, a pinbar has formed on the daily. Mario Draghi is always a game changer. The buyers bought tickets thinking they were heading north, but Draghi sent them packing south. Now the price is set to float slowly upwards, and those that bought euros at the maximums will try to get out of long positions at around 1.1335 to 1.1349 (fibo 50.0-61.8% from 1.1268 to 1.1397).

Perhaps a W-shaped pattern will form; a return to 1.1387 and a fall to 1.1320. I just don’t see the fundamental factors for a revival of the euro to 1.1387 this Friday. There is no news which could shake the market up, as happened yesterday.