EURUSD: technicals indicate a correction to 1.0920

On Wednesday the 20th of May, the euro rose by 55 pips against the dollar. The greenback lost ground across the market following a rise in demand for risky assets. In the US session, the pair rose to 1.0999, just one pip short of testing 1.10. The single currency continues to be propped by the proposal to create a 500bn EUR fund that will help Europe recover from the impact of coronavirus.

Day’s news (GMT+3):

  • 10:30 Germany: Markit manufacturing PMI (May), Markit services PMI (May).
  • 11:00 Eurozone: Markit manufacturing PMI (May), Markit services PMI (May).
  • 11:30 UK: Markit manufacturing PMI (May), Markit services PMI (May).
  • 13:00 UK: CBI industrial trend survey - orders (May).
  • 15:30 Canada: housing price index (Apr).
  • 15:30 US: Philly Fed manufacturing index (May), initial jobless claims (15 May).
  • 16:45 US: Markit manufacturing PMI (May), Markit services PMI (May).
  • 17:00 existing home sales (Apr).
  • 21:30 US: Fed Chair Jerome Powell’s speech.
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Current situation:

Yesterday’s expectations were met. The pair saw sharp growth that fell just short of 1.10. As of now, we’ve had a 76% correction to yesterday’s movement. At the time of writing, the euro is trading at 1.0974. The pair corrected to the balance line and then continued to rise again.

Considering that we’ve got a double divergence on the chart, there’s a high probability of a breakout of the lower line of the channel (1.0950). If all the majors were trading up today, we’d be predicting a triple top model. If we get a decline as expected, we can expect this to go as far as 1.0860. However, these are just thoughts. We’ll have to wait and see how things play out.

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