Technical Analysis by Alpari

[Alpari]

EUR/USD: market in expectance of Draghi press conference​

Previous:

On Wednesday, the euro/dollar rate closed down. During trades in Asia and Europe, the buyers were trying to resume the growth, but at 1.1000 they met with sell orders. This forced them to leave their long positions. As a result, the euro quickly cheapened.

Pressure on the euro piled up after the release of mixed US housing sector data. The number of houses which had been started to be built fell, but construction permits issued rose. On this news the euro/dollar fell to 1.0955.

Market expectations:

The pair switched into a correctional phase after reaching 1.0955. The same thing happened on 18th October when the 1.0970 minimum was reached.

Today’s key event for the euro is the ECB meeting and Draghi’s press conference. No changes in monetary policy are expected from the regulator, but the euro looks vulnerable before Draghi is due to speak. During his speech the currency market is expected to be volatile. Traders are waiting for his explanation of the situation with regards to QE: i.e. does the regulator plan to tie the program up or not. Due to the ECB chief speaking I haven’t bothered with a forecast.

Day’s News (GMT+3):

• 09:00, Swiss September balance of trade and German September manufacturing price index;
• 11:00, Eurozone August balance of payments;
• 11:30, September retail sales;
• EU economic summit (all day);
• 14:45, ECB interest rate decision;
• 15:00, BoE deputy governor to speak;
• 15:30, ECB Draghi press conference, Philadelphia Fed October manufacturing index, initial unemployment benefit applications for the week ending 16th October;
• 17:00, September secondary housing market sales, Conference Board’s September index for leading indicators;
• 17:30, US natural gas reserves for the week ending 16th October.

Technical Analysis:

Intraday forecast: minimum: n/a, maximum: n/a, close: n/a.

Euro/dollar rate on the hourly. Source: TradingView

The market is continuing to throw buyers off the boat as it sinks, but somehow they’re just becoming more and more. Long/short is now 81/19. At the same time, the volumes before Draghi speaks have fallen.

In any case there are too many buyers for the price to ease upwards. The time has come for Mario Draghi. During his press conference he could change things up with regards to traders’ open positions.

The closest target for the sellers is currently 1.0947. Since the price is unpredictable when Draghi speaks, I haven’t done a forecast in my analysis for today. For the weights of the balance to be tipped in favour of the buyers, we need the day to close above 1.10.

 

[Alpari]

EUR/USD: factors indicating a correction​

Previous:

On Friday, 21st October, the euro/dollar closed down. During the day three bottoms formed at 1.0896 (Asia), 1.0878 (Europe) and 1.0859 (USA). Pressure on the euro came from Draghi’s announcements on Thursday and his press conference after the ECB convened, in addition to expectations of a US rate rise before the end of the year.

Draghi signalled that there will be no sharp halt to QE and that it will probably be extended.

Pressure increased during the American session due to a weakening of the Canadian after an announcement by the country’s trade minister. She announced that the long negotiations for the creation of a free-trade zone between the EU and Canada have ended in collapse. The USD/CAD rose 120 points to 1.3355. Other currencies followed this fall against the dollar.

Market expectations:

The euro is still under pressure. Moreover there are three interesting things. The first is that today is Monday. On this day, independent of the news, my forecast always goes against that of Friday. Secondly, a double bottom has appeared on the hourly. Thirdly, the oscillator stochastic has flipped downside up and the CCI has crossed -100. The technical picture is indicating an upward correction to 1.0911, but the many long positions indicate a fall to 1.0825.

Day’s News (GMT+3):

• 10:30, German preliminary index for business activity in the manufacturing and service sectors in October;
• 11:00, Eurozone preliminary index for business activity in the manufacturing and service sectors in October;
• 13:00, German central bank to publish monthly report and UK expected industrial orders from the CBI for October;
• 15:30, Canadian August wholesales;
• 16:00, FOMC’s Dudley to speak;
• 16:05, FOMC’s Bullard to speak;
• 16:45, US preliminary index for business activity in manufacturing for October;
• 19:15, SNB president to speak;
• 22:30, BoC governor to speak.

Technical Analysis:

Intraday forecast: minimum: 1.0860 (current Asian), maximum: 1.0911, close: 1.0888.

Euro/dollar rate on the hourly. Source: TradingView​

The euro/dollar dropped to 1.0859 on Friday. After a correction to 1.0899, the price returned to 1.0860. At the time of writing this review, the euro is trading at 1.0867. Since it is Monday and I expect a movement against that of Friday, I say there will be a rise to 1.0911. Today I am developing my thought of a forming of a double bottom price pattern. Due to the crowd continuing to buy euros even though it is falling, we could see it hit 1.0850. In this case I will have to look at a V pattern forming. It’s dangerous to buy euro with the crowd. It’s safer to buy euro after a bounce.

 

[Alpari]

EUR/USD price stumbling around 1.0850​

Previous:

On Tuesday the euro/dollar was reaching for the support at 1.0850. The sharp price bounce could only have been facilitated by US stats and Carney and Draghi speaking. The Conference Board consumer confidence index for October didn’t meet expectations: dropping to 98.6. The euro restored from 1.0851 to 1.0905.

Market expectations:

After three separate rebounds from 1.0850/60, the risks of heading to 1.0918-1.0930 are up. The Aussie currency could provoke European traders since it strengthened 80 points against the dollar following publication of consumer inflation data in Australia for the third quarter. Inflation ended up higher than the market had expected.

Taking into account that there are a lot of long positions from small-time speculators for the euro, a rise in quotes will be used by the sellers to get rid of euro. If we go off the four-hour time-frame: a rise in the quotes above 1.0920 will mean the buyers open the road up for themselves to 1.0945/50. Even in this case the bearish trend will persist for the euro/dollar.

Day’s News (GMT+3):

• 09:00, German consumer confidence in October from Gfk;
• 10:00, German September import prices;
• 11:30, UK mortgage approvals in September from BBA;
• 15:30, US preliminary data on wholesale reserves for September;
• 16:45, preliminary business activity index in the service sector for October;
• 17:00, US September first-time sales on the housing market;
• 17:30, US oil and gas reserves for the week ending 22nd October.

Technical Analysis:

Intraday forecast: minimum: 1.0874 (current Asian), maximum: 1.0918, close: 1.0906.

Euro/dollar rate on the hourly. Source: TradingView

On Tuesday the euro/dollar dropped to 1.0851. The price was 21 points off the calculated level. The 157th degree held out from the sellers attacks. From here the price restored by 45 points to 1.0905. The price bounced after weak consumer confidence data came out.

In my forecast I’ve gone for a rise to 1.0918. I don’t really want to be looking at a strengthening of the euro. The morning’s rise of the AUD/USD is interfering for any forecast of a fall. I reckon that whilst the rates are rising we need to use this to sell euros. Growth to cancel with a close of the hourly candle below 1.0869.

 

[Alpari]

Expected fall for EUR/USD​

Previous:

On Wednesday as part of a correctional movement, the euro/dollar rose to 1.0947. The pair then dropped from this maximum after US stats came out. The values for the business activity index in the service sector and primary market housing sales in the US exceeded expectations. By trade close in New York, the euro had fallen to 1.0900 and to 1.0892 on Thursday in Asia.

Market expectations:

Since the daily picture is still bearish, after an upward correction we can consider a downward impulse. In my forecast I’ve gone for a fall to 1.0868. Market participants are waiting for the first US GDP assessment for Q3. The report will be out on Friday. Before the FOMC meeting on 2nd November, the data will have real significance for the US Fed and will have a real effect on the movements of key pairs. According to the latest data from CME Group FedWatch Tool, the likelihood of an interest rate hike in December is 78.3%.

Day’s News (GMT+3):

• 09:00, Swiss consumer indicator for September from UBS;
• 11:00, Eurozone M3 money supply and private lending in September;
• 11:30, UK preliminary GDP data for Q3 of 2016 and the index for business activity in services for August;
• 13:00, UK retail sales in October according to the Confederation of British Industry;
• 15:30, US durable goods orders in September and initial unemployment benefit requests for the week ending 22nd October;
• 17:00, US incomplete housing sales in September.

Technical Analysis:

Intraday forecast: minimum: 1.0868, maximum: 1.0912 (current Asian), close: 1.0879.

Euro/dollar rate on the hourly. Source: TradingView

On Wednesday the euro/dollar corrected by almost 90 degrees. The correction wasn’t out of the ordinary. In Asia the rate dropped to the LB (45th degree). The market is balanced at the moment. The price could stray from it at any moment. Since the day’s trend is bearish, I’m in the bear camp. In my forecast I’ve gone for a fall of the euro to the 67th degree at 1.0869. If the price reaches this before the American session then we can shift the target to 1.0843.

 

[Alpari]

Expected fall for EUR/USD​

Previous:

The euro/dollar closed slightly down on Monday. After a fall to 1.0936 the price rose to 1.0982. The pair bounced from its minimum following the GBP upwards on news the BoE’s Mark Carney will remain governor until the end of June 2019. On Thursday he will hold the latest BoE meeting regarding interest rates for the UK. After this we will see the minutes from the meeting and an inflation report.

Market expectations:

The euro is going for 1.0967 dollars in Asia. Since the euro/pound is locked in with euro sellers, any strengthening of the euro against the dollar will be restricted. I reckon that a growth in the quotes will start from 1.0947.

Keep an eye on the euro/pound cross. Today will see a UK report on business activity. If it comes out weak then the euro/pound cross’ movements will switch from downwards to upwards. In this case the price is unlikely to reach the calculated minimum. If the indicator comes out strong then we can stick to my scenario. The euro will drop to 1.0947 and then will shoot up after the pound.

Day’s News (GMT+3):

• 11:15, Swiss September retail sales;
• 11:30, Swiss October PMI for the manufacturing sector;
• 12:30, UK October business activity in the manufacturing sector;
• 15:30, Canadian August GDP;
• 16:30, Canadian industrial activity in October from the Royal Bank of Canada;
• 16:45, US definitive industrial activity data for October;
• 17:00, US manufacturing activity in October from the ISM, September construction expenditure, November consumer economic optimism index from IBD/TIPP for November, October PMI from the ISM;
• 19:00, BoC’s governor to speak.

Technical Analysis:

Intraday forecast: minimum: 1.0947, maximum: 1.0977, close: 1.0965.

Euro/dollar rate on the hourly. Source: TradingView

On Monday the price didn’t make it to the target by just three points. As I expected, the pair slid from the balance line. The fall was down to Carney deciding to stay in the UK until June 2019. The pair’s growth was limited to 1.0981 due to the fall in the euro/pound.

The euro is going for 1.0966 dollars. The oscillator stochastic is forming a euro buy signal. In principle, the euro could rise from its current level, but it would be better to do so from 1.0947/50. Since the US Fed will issue its interest rate decision on Wednesday, I don’t expect to see the price leave the 1.0936-1.0992 range today.