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EURUSD: poised for an upward correction

The EURUSD pair closed with losses on Wednesday, November 11, with the European currency dropping 0.30% to 1.1777. During the North American session, the key pair fell to an intraday low of 1.1746.

The US dollar locked in gains against rival currencies as US 10-year bond yields rose to 0.9823%. The greenback depreciated against the New Zealand dollar as traders bet that the Central Bank of New Zealand will not set negative rates anytime soon.

The euphoria over news of encouraging Covid-19 vaccine results has subsided as pressure from the pandemic comes back into focus. Coronavirus cases are spiraling upward every day in the US and Europe. Vaccination will most likely get under way only next year.

Todays macro agenda (GMT+3)

11:00 UK: BoE Bailey speech

13:00 Eurozone: industrial production (September)

16:30 Canada: new home sales (October); US: CPI (October), jobless claims (October average)

19:00 US: EIA weekly petroleum status report

19:45 Eurozone: Lagarde speech, BoE Bailey speech, Fed Powell speech

22:00 US: budget statement (October)

1

Current outlook  

The decline in EURUSD halted at the 67-degree line (1.1751) after coming off the earlier 1.1834 high. Three bottoms shaped up during the fall at 1.1795, 1.1780 and 1.1746. The price action is still locked within a descending channel below the balance line. At the time of writing, the euro was trading at 1.1758. It will be important to see how trading opens in London as this trend rarely carries over into the Asian session. For this reason, any move not driven by the news flow looks suspicious for one hour before 8:00 GMT.

The British pound retraced to yesterday's low against the dollar as pound sellers in the EURGBP cross have now joined up with pound sellers against the dollar. Players should also keep tabs on which way the main cross is moving, since in case of further growth it will support buyers and prevent the EURUSD pair from falling in the vicinity of 1.1755 or 1.1746. If pressure on the euro gains momentum after the European opening, then we should expect the 1.1687 level to be tested. Interim support will kick in at 1.1724.

It is also worth noting that the Stochastic Oscillator has entered buying territory. The indicator does not run counter to the trend, but it should be noted that the pair is technically ready to rise. Amid a recovery of the euro against cable, European traders could safely push the price back to 1.1800 amid a sharp recovery, as was the case on November 4, to 1.1826. The pair’s growth looks interesting today from the technical standpoint.

The market will most likely experience heightened volatility throughout today’s session. Players are advised to tune into speeches by ECB head Christine Lagarde, BoE governor Andrew Bailey, and Fed chairman Jerome Powell. Bailey is scheduled to deliver two speeches.

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