EURUSD: correction sees price meet balance line

On Monday, March 9, trading on the euro ended with an increase of 1.35% (+152 points). This was the worst day for the stock market. Trading on the New York Stock Exchange was suspended during the session after the indices fell by 7.0%. This was the first suspension in trading on the stock exchange since 2008. After trading was resumed, the indices corrected slightly.

The main reason for the strengthening of the euro and the fall of stock indices was the collapse of the oil market. The price of Brent fell 31% to $31 USD. Russia refused to agree to the OPEC deal, and Saudi Arabia promised to increase its production to 12 million barrels and reduced the price of its oil for buyers.

The fall in oil prices negatively affected commodity currencies. AUSUSD fell to 0.6314 (winning back all losses in the process), the lowest since 2009. USDCAD rose to 1.3759, the highest since 2018.

Today’s events (GMT+3):

  • 13:00 Eurozone: Gross Domestic Product s.a. (YoY) (Q4), Employment Change (YoY) (Q4).
  • 23:30 USA: API Weekly Crude Oil Stock (Mar 6).

Current events:

Due to the collapse in oil prices, no one is currently discussing macroeconomic indicators. Everyone forgot about the release of Friday’s payroll data. The price per barrel of Brent crude oil corrected by $5 UDS from a minimum of $31.25 USD.

In Asia, the EURUSD pair completely blocked yesterday's growth. The correction was at the 135th degree, and the price rolled back to the balance line. Technically, the pair can expect growth. Given that futures on the SP500 recovered by 3.5%, then against the backdrop of positive dynamics of stock indices and oil, the downwards correction may gather pace.

According to the forecast, a breakdown of the lower line of the channel and a decrease down to the 180th degree were considered – 1.1281. It is more logical to rely on a price reversal model, which is similar to the models observed with cryptocurrencies.

We expect growth to 1.1395-1.14. If it is sharp, then above 67th degree. Then the realization of the decline will be in question. Here we will have to wait a day to understand what position the market will form and what market players expect. There are a lot of long positions open, so bears are looking for a moment to advance in order to tear off the stops over the longs and use them as fuel to lower the price down to the 1.12 area. But, buying after yesterday's rally is risky business.

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