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Euro/Dollar: Eurobulls Strengthening Above 1.14

Hourly

Yesterday’s Trading:

Before the Fed decision came out, the euro/dollar was in a sideways trend. After trading opened in Europe, the price returned to the balance line (the simple middle line at 55).

The FOMC meeting saw them leave the base rate in a 0.00-0.25% range. The regulator didn’t put up the rate since it could see the risks that such an action would bring about for the global financial system, for low inflation and for high volatility on the financial markets.

Investors were surprised by the fact that all of the members of the committee, bar Jeffrey Lacker, didn’t vote to put up the rate. On this decision and Janet Yellen’s speech, the euro/dollar rose to 1.1440.

Main news of the day:

  • At 11:30 EET, the Eurozone will announce their July balance of trade changes;
  • At 15:30 EET, Canada is publishing its August CPI and core CPI;
  • At 17:00 EET, the USA is releasing its August version of the index of leading indicators.

Market Expectations:

The economic calendar today is pretty much empty. At the very least, there’s no news which could make the pairs fluctuate wildly. On the last day of the week, Europe could see a dollar minimum for the week and start fixing before the weekend.

Technical Analysis:

  • Intraday target maximum: 1.1455 (in Europe), minimum: 1.1380 (in the States), close: 1.1405/10;
  • Intraday volatility for last 10 weeks: 125 points (4 figures).

The euro/dollar has stopped around the U4 and just above the 180th degree. Currently the price has returned to the MA channel. The rebound was 45 degrees. Looking at the AO indicator, there’s not enough divergence. Due to this, I’m expecting a renewal of the maximum and a rebound to 1.1380.

Daily

The euro/dollar has returned to an important resistance level after the FOMC meeting. I reckon that today the eurobulls won’t be able to pass the resistance zone. To move above 1.1466, it’ll be necessary to withstand two days below this level, otherwise people will start buying dollars at the maximum. The CCI is above +100 (bull signal). Whilst it hasn’t retuned back below 100, it’s a bit risky to sell euros. You can scalp, but doing this for over 5 hours is dangerous (you’ll need to use the in and out tactic). Now to the Weekly.

Weekly

The US Fed meeting took place and they left the base rate unchanged. The euro is up to 1.1440 against the dollar. After such a decision, risks of a return to 1.1772 are also up. As soon as 1.1466 is passed, you can forget about any fall for the euro.

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