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Euro/Dollar: Expected Test of 1.13

Hourly

Yesterday’s Trading:

Monday saw the euro down to 1.1305 against the US dollar. Traders are selling euros as they expect the ECB to undertake additional measures on Thursday to combat low inflation.

Main news of the day:

  • At 09:00 EET, Germany is publishing its manufacturing price index for September;
  • At 11:00 EET, the Eurozone is releasing balance of payments data;
  • At 13:00 the BoE’s Mark Carney will speak;
  • At 15:30 EET, the US will show us construction permits and planning for new housing for September;
  • At 16:00, the US Fed’s New York president, William Dudley, will speak;
  • At 16:15 EET, the US Fed’s Jerome Powell will speak;
  • At 18:00 EET, the US Fed’s Janet Yellen will speak.

Market Expectations:

The euro/dollar has been stuck in a sideways for 14 days. The euro is still under pressure due to the ECB meeting. The AO and stochastic indicators are overloaded, so on my forecast I’ve gone for a further fall of the EUR/USD rate to 1.1290-1.13.

Technical Analysis:

  • Intraday target maximum: 1.1345, minimum: 1.1290, close: 1.1315;
  • Intraday volatility for last 10 weeks: 121 points (4 figures).

The euro is vying for its position with the dollar. EUR/USD is trading around 1.1335 against yesterday’s 1.1305 minimum. I wouldn’t count out a rebound to the balance line at 1.1345/50. From there I’m waiting for sales to resume and a fall in the rate to the lower limit of the channel (dotted line).

Daily

The euro/dollar was down to 1.1305 on Monday. I’m waiting for the euro to fall further to 1.1250. If the ECB extends QE, we’ll see another dollar rally to 1.1086 and below. Now to the weekly.

Weekly

The euro/dollar has broken from the upper limit of the horizontal 1.1086-1.1494 channel. The pair will now shift to the lower limit. I’m still waiting for a test of 1.13 and movement towards 1.1250.

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