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Expected Movement in 1.1175 – 1.1215 Range for Euro

Yesterday’s Trading:

The euro bulls on Thursday tried to strengthen above the trend line and 1.1190 resistance several times but couldn’t manage it. The price constantly bounced back to 1.1165. After US stats came out, the euro/dollar upped it to 1.1216.

The US economic data came out better than expected. The euro/dollar reacted to the news by dropping 20 points and, due to growing appetite for risk, it rose to 1.1216. The buyers didn’t manage to hold at this level. The euro/dollar returned to 1.1170 following oil and gold before Yellen is to speak.

The number of unemployment benefit applications for the week ending 21st May was 268k (forecasted: 273k, previous: 278k).

Durable goods orders in the US in April were up 3.4% (forecasted: 0.4%, previous: 1.9%).

The number of signed deals for housing purchases in the US was up 5.1%.

Market Expectations:

Market participant attention today is set to be on Janet Yellen. Traders hope that she will give an indication of whether the Fed will increase interest rates. Futures for such action are currently indicating that the likelihood of an increase in rates in June is 26% (previously over 30%) and 56% in July.

The euro/dollar is trading at around 1.1185. Taking into account that the likelihood of an interest rate rise has fallen, on Friday I expect the euro to consolidate in a 1.1175 – 1.1215 range.

Day’s News (EET):

  • 15:30, US preliminary GDP for Q1 of 2016;
  • 17:00, US reassessment of consumer sentiment and inflation expectations from Michigan university for May;
  • 19:30, Fed’s Yellen to speak;
  • 20:05, drilling rigs from Baker Hughes.

Technical Analysis:

Intraday forecast: minimum: 1.1177, maximum: 1.1212, close: 1.1198.

Euro/dollar rate on the hourly. Source: TradingView

The trend line which took its beginnings from a 1.1128 minimum has had to head through 1.1158. The euro is currently trading above the 1.1180 support (grey zone) near the trend line. With the situation like it is, I wouldn’t look at the technical signals because of Yellen being set to speak. Perhaps there will be a false break of the levels and signals from the indicators.

In my forecast I’ve gone for price fluctuations in a 1.1175 – 1.1215 range. Today a V- or W-shaped patter could emerge. I’m leaning more towards the latter: a strengthening to 1.1212 and a return of the price to 1.1185.

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