On Tuesday the euro/dollar was up to 1.1386 during European trades. This growth wasn’t strengthened, so the price returned to 1.1331 by the close of the European session. Janet Yellen didn’t mention monetary policy, so there was no reaction to her speech.
Main news of the day:
- At 17:00 EET, the BoC’s interest rate decision will be out and the Bank will make an announcement;
- At 17:30 EET, US oil reserve stats from the US department of energy will be out;
- At 18:15 EET, the BoC’s will hold a press conference;
- At 20:00 EET, the BoE’s Mark Carney will speak.
The market is patiently awaiting the ECB meeting. No one knows whether the ECB will extend their stimulative program. I think that more important here is what Mario Draghi has to say at the end of the meeting. His words at the press conference will affect how the euro/dollar closes on Thursday.
- Intraday target maximum: 1.1367, minimum: 1.1312, close: 1.1355;
- Intraday volatility for last 10 weeks: 121 points (4 figures).
The euro/dollar is currently trading near the LB. The last two days have seen a 1.1300 and 1.1390 trading range form. Taking into account that tomorrow the ECB meeting will take place and Europe’s economic calendar is bare, I think the euro/dollar will drop to the trend line and close the day near the LB.
On Tuesday the euro unexpectedly slowed in its fall. It’s useless to make a forecast before the ECB convenes. If we look at the technical picture: the stochastic is trying to turn around in the zone around 20%. If the ECB extends QE, a new dollar rally against the euro will begin and the rate will head to 1.1086 and below. If the ECB sticks to the same policy and Draghi doesn’t come out with any surprises, the euro/dollar will shift upwards. Here we need to see how the euro passes 1.15. Some difficulties could arise before the FOMC meeting. Now to the weekly.
The euro/dollar is still trading in a 1.1086-1.1494 horizontal corridor. I’m still waiting for a test of 1.13 with a subsequent fall to 1.1250. The stochastic is moving upwards and isn’t supporting my idea of a weakening euro against the dollar. The ECB and its chief will dot the “i”s and cross the “t”s tomorrow. Draghi could cancel out all of the technical signals tomorrow.