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Euro/Dollar: Euro Ruptures 1.1250 Resistance

Hourly

Yesterday’s Trading:

The US dollar closed down against the key currencies on Thursday. At first the pound strengthened against the dollar after the publication of the Bank of England’s minutes. Then market participants made use of weak data on the price of imported goods to sell the dollar. They sold the dollar, believing the US Fed will not raise rates on 17th September.

Gold started to rise first of all, then the euro/dollar and then the pound/dollar. The number of initial unemployment benefit applications in the US was down last week, but this couldn’t help the dollar stop falling. US inflation is still weak, so there’s no reason to put the rate up.

The number of initial unemployment benefit applications in the US fell from 282,000 to 275,000.

The US import index fell from -0.9% to -1.8%.

Main news of the day:

  • At 9:00 EET, Germany is publishing its August CPI;
  • At 11:30 EET, the UK is releasing survey results for inflation expectations;
  • At 14:30 EET, Christian Forbes, member of the MPC, will give a speech;
  • At 15:30 EET, the USA is releasing its August PMI;
  • At 17:00 EET the Reuters/Michigan September consumer confidence index is due;
  • The Eurozone finance ministers are meeting and M. Draghi is due to give a speech.

Market Expectations:

The euro has smashed through the 1.1250. Trading is currently taking place at the U2. A renewal of the maximum near the U3 could see the euro putting downward pressure on itself. The level at which the market closes is very important.

It’s a 50-50. Since the trigger for dollar sales was gold, keep an eye on the metal. If quotes head back down, the euro and the pound will also drop against the dollar.

Technical Analysis:

  • Intraday target maximum: 1.1320 (in Europe), 1.1270 (in States, or could be before then), close: 1. 1280. Better in region of 1.12;
  • Intraday volatility for last 10 weeks: 130 points (4 figures).

After yesterday’s break in the resistance, the balance tipped in favor of the main pairs has started to switch to sellers of the dollar. A euro growth slowed by 112 degrees. The 112-135 zone is a good, strong resistance. Here I can offer a couple of scenarios: a renewal of the maximum and a return to 1.1280 (most likely), a fall from the current level to the LB or a continuation of the growth to 1.1372.

Daily

The upper limit of the channel has been broken. Where the day and week close is important. The trigger for euro growth has become the prices of gold and the pound increasing. Here the closest observable target is 1.1372 (1st September maximum). Perhaps it won’t reach it since the pair is trading near the U3 on the hourly. Now to the Weekly.

Weekly

The euro has ruptured the 1.1250 resistance, but it’s not all bad. Only a close of the week above 1.1332 will cancel the daily pinbar signal with a 1.1712 maximum.

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