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EUR/USD: Possible update of the maximum before a downward correction

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On Wednesday the euro closed the day up against the dollar, despite the serious fall in the first half of the day. The euro rose 170 points after Trump’s press conference. During the Q and A session with journalists, relations with Russia and the country’s influence on the outcome of the elections dominated. Trump said nothing about his future plans for the economy. What he did say had a positive effect of state bonds, but a fall in their yield had already negatively affected the USD.

Market expectations:

During Asian trading the euro is up. The fall in the yield of 10 and 30-year US bonds is still putting pressure on the dollar. The yield for the 10-year bonds has fallen by 1.52% and that of the 30-year has fallen by 1.18%.

After yesterday’s revival of the price by 170 points, there’s no point waiting for a euro rally on Thursday. A test of 1.0639 is possible, but it’s not 100% that it will take place. Yesterday’s V pattern may help the euro bulls, only it’s not clear how traders will react to the ECB’s minutes from their meeting on monetary policy. These are key for the euro on Thursday. Fed representatives are set to speak during the American session. It’ll be interesting to hear what they have to say after hearing Trump’s words yesterday/ Maybe it will have an effect on the dollar.

Day’s news (GMT+3):

  • 13:00, Eurozone November changes in industrial production;
  • 15:00, ECB minutes on monetary policy;
  • 16:30, Canadian November housing price index. US initial unemployment benefit applications for the week ending 8th January, Chicago Fed chief Evans and Philadelphia Fed chief Harker, along with FOMC member Lockhart to speak, plus December import price index data to be released;
  • 21:15, FOMC member Bullard to speak;
  • 21:45, FOMC member Robert to speak;
  • 22:00, US December Federal budget balance.

Technical analysis:

Euro/ rate on the hourly. Source: TradingView dollar

Intraday forecast: minimum: 1.0572, maximum 1.0639, close: 1.0576.

The euro dropped all the way to the D3 at 1.0454 on Wednesday. The form of the movement fit well with the forecast but didn’t with the price. The euro is down almost 135 points from a maximum of 1.0627, restoring these 135 degrees after Trump spoke.

As a result we have a V-shape on the hourly. After a price correction by 45 degrees, the price revived to 1.0613. The indicators are showing a fall for the euro in the first half of the day, but for some reason I’m thinking along the lines of a correction phase starting from the 1.0635/40 zone. In Asia the yield for American bonds is falling. The buyers have nothing to stop them from opening Europe at 1.0634. I expect the day to close at around 1.0575.

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