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Euro/Dollar: Expected Fall to 1.11

Hourly

Yesterday’s Trading:

The euro/dollar fell to the U3 on the American session, working off the weak stats. A correction began after trades in Europe. Then Janet Yellen sent the eurobulls back down to the LB. The head of the Fed didn’t exclude putting up rates this year.

August sales of new homes in the US stood at 552,000 (forecasted: 510,000, previous: reassessed from 507,000 to 522,000).

Initial unemployment benefit applications in the country increased from 264,000 to 267,000.

Durable goods orders fell from 2.2% to -2.0%.

Main news of the day:

  • At 15:30 EET, the US is publishing its definitive GDP figure for Q2 (3rd assessment);
  • At 16:45 EET, the US is publishing its Markit business activity index in the service sector for September;
  • At 17:00 EET, the US is publishing its Reuters/Michigan September consumer confidence index.

Market Expectations:

Trades in Europe could open with a rise for the dollar since there’s no important news out. This evening the US will publish definitive Q2 GDP figures. Since this is the third assessment, I’m expecting volatility within 10 points. It’s not that interesting since the 3rd quarter ends in 6 days.

Technical Analysis:

  • Intraday target maximum: 1.1215 (Europe), minimum: 1.1145 (USA), close: 1.1175;
  • Intraday volatility for last 10 weeks: 125 points (4 figures).

A daily pinbar with a 1.11 target (see Daily tab) has started to form on the euro/dollar. The euro has been trading by the LB for a few hours now. After a fall overnight, there’s the possibility of a rebound, however I’m more inclined to believe there’ll be a fall without a correction to 1.11. On Monday it could correct to 1.1180 and from Tuesday it could renew the month’s minimum.

Daily

On Thursday I thought that the euro/dollar would continue to consolidate at 1.1160. It was able to restore itself to 1.1295 and then headed back to 1.1170 after Yellen’s speech. By the end of the day, a pinbar had formed. The minimum was broken. Today’s target is 1.11. The interim target is still 1.1086 with the second at 1.10. Now to the Weekly.

Weekly

The euro/dollar is still trading sideways between 1.1086 and 1.1459. After a break in 1.1086, it will start to form a pinbar.

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