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Euro/Dollar: Left the Range on Weekly – New Target: 1.1620

Hourly

Yesterday’s Trading:

On Wednesday the USD was down against the key pairs after weak retail sales data and manufacturing inflation figures for the US came out. The data was worse than expected. Previous retail sales figures were reassessed downwards. The key index for industrial prices fell to a minimum since January and the PPI was negative. The data has signalled a slowing of US economic growth and has lessened the likelihood of an interest rate hike in the near future.

The US retail sales index for September stood at 0.1% (forecasted: 0.2%, previous: reassessed from 0.2% to 0.0%).

The September retail sales index for the country which doesn’t take car sales into account was -0.3% (forecasted: -0.1%, previous: -0.1%).

The US PMI for September was -0.5% MoM and -1.1% YoY (forecasted -0.2% MoM and -0.7% YoY, previous: 0.0% MoM and -0.8% YoY).

The US September PMI without taking food and energy prices into account was -0.3% MoM and 0.8% YoY (forecasted 0.1% MoM and 1.2% YoY, previous: 0.3% MoM and 0.9% YoY).

Main news of the day:

  • At 15:30 EET, the US is publishing its September CPI, industrial activity index from the NY Fed for October and initial unemployment benefit applications;
  • At 17:00 EET, the US will release its Philadelphia Fed industrial activity index;
  • At 17:30 EET, FOMC members Dudley and Bullard will speak.

Market Expectations:

The weak US stats have flipped expectations on their head. The dollar is correcting throughout the market. At 15:30 today we will see the US CPI and initial unemployment benefit application numbers. If the data is once again disappointing for the dollar bulls, the dollar’s fall will continue.

Technical Analysis:

  • Intraday target maximum: 1.1518, minimum: 1.1461 (current Asian), close: 1.1480;
  • Intraday volatility for last 10 weeks: 121 points (4 figures).

The euro/dollar is back to 1.1490. This is where the 112th degree is. At 30 points above it is the U3. From 1.1471 to 1.1535 on the daily we can see the resistance zone (see daily graph). For Thursday I’m inclined to believe that we’ll see a renewal of the maximum and a rebound. However, it is possible that we’ll see something else: recoil in Europe to 1.1450/60 and then a growth on the US session to 1.1518. In any case, I’m still going to be waiting for a test of 1.15 today.

Daily

The minimum distance after the break in the trend has been passed. 1.1471 has been reached, but there’s no W-shape pattern. The upper limit of the resistance zone goes through 1.1535. If we look at the channel, we can see a 1.1620 target for the euro. I think that 1.1535 won’t be passed today. Now to the Weekly.

Weekly

The euro has left the 1.1086-1.1459 range. Now all that’s left is to wait for it to reach 1.17. With a close of the weekly candle in the region of 1.1370, any further growth will be cancelled out.

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