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On Monday, euro/dollar trading closed up. In the first half of the day the euro cheapened to 1.0707 dollars as part of a correction. After Trump spoke and the yield for US bonds fell, the price restored to 1.0772.

Trump promised to cut business rates and implement a protectionist policy. While he hasn’t given any detailed plan of how to stimulate the US economy, the USD will swing in both directions.

The US president has started to fulfil his promises. Donald Trump has signed a decree to leave the Trans-Pacific Partnership. Barak Obama’s team saw this agreement as one of the key measures to counter Chinese economic influence.

Market expectations:

In Asia the yield for American bonds is in the red zone. The euro/dollar is trading slightly down. Taking into account that the split between short and long is at 74/25, today we will probably see movements similar to that of yesterday: the pair will fall to offload the hourly indicators and then update the maximum to balance out the split between short/long. 1.0728 is the support. From here we could see a bounce to 1.0785. Sharp rebounds after a renewal of the session minimum will indicate the market’s intention to head higher.

The UK supreme court ruling on Brexit could increase volatility on the market. The court will decide whether there will need to be a vote in parliament about the conditions for the UK leaving the EU. Taking into account that Theresa May has already announced that she will put the plans to a vote in parliament, market participants could well ignore the court’s decision.

Day’s news (GMT+3):

  • 11:30, German preliminary data for business activeness in the industrial and service sectors for January;
  • 12:00, Eurozone preliminary data for business activeness in the industrial and service sectors for January;
  • 12:30, UK supreme court decision on the procedure for carrying out Brexit, net state borrowing in December;
  • 17:45, US preliminary data for January business activity in industry;
  • 18:00, US housing sales on the secondary market in December, January industrial index from the Richmond Fed;
  • 18:30, Australian index for leading indicators in November from the Conference Board.

Technical analysis:

Euro/ rate on the hourly. Source: TradingView dollar

Intraday forecast: minimum: 1.0728, maximum 1.0785, close: 1.0758.

On Monday the euro fell 45 degrees during trading in Europe. From here the price ricocheted back 45 degrees from the 1.0707 minimum. In Asia the pair is in a correctional phase. Taking into account that the hourly candle has closed below the trend line, in my forecast I’ve gone for a fall to 1.0730.

The line at 1.0730 is a copy of the line which runs across the 1.0755 and 1.0772 peaks. If the price bounces from it then it’s highly likely that there will be a test of 1.0800. If the price drops to the 45th degree at 1.0720 then we will need to be prepared for a correction to the 67th degree on Wednesday. For my set up it would be better to have a deep correction after the forming of three peaks (1.0755-1.0772-1.0785) as forecasted.

source - http://alpari.com/en/analytics/reviews/market_sessions/17865_24012017/

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