The euro rate closed down against the USD. The crash of the GBP to a 31-year minimum raised demand for safe assets: JPY, gold and US state bonds. By the close of the day, the euro was at 1.1062 dollars and the pound was down against the dollar to levels unseen since 1985.
In Asia the pound/dollar fell to 1.2791. After a 4% fall it tried to muster a fight back to 1.28. At 7:35 EET, the GBP was at 1.2882 dollars. Today is Wednesday. Trader attention will be on the US Fed minutes which are out at 21:00 EET. Then the attention will switch to the June US labour market report which is out at 15:30 EET on Friday.
On Wednesday the euro/dollar is expected to come out with a V formation with a minimum at 1.1028. It could be lower. Here we need to keep an eye on the euro/pound cross. If it starts correcting, the pound will be in a winning situation and it will start a correctional movement after yesterday’s crash. The resistance level is at 1.1088.
Day’s News (EET):
- 11:10, business activity index in the retail sector for June.
- 13:30, ECB’s Peter Pratt to speak;
- 15:30, US and Canadian May external trend. ECB vice president Constancio to speak;
- 16:45, US definitive service sector business activity index for June;
- 17:00, US business activity throughout June in the non-manufacturing sector from ISM;
- 18:00, ECB’s Mersch to speak;
- 21:00, US Fed minutes.
Intraday forecast: minimum: 1.1028, maximum: 1.1065, close: 1.1052.
Euro/dollar rate on the hourly. Source: TradingView
The LB couldn’t hold back the euro from falling. Due to a general strengthening of the USD, the euro fell to 1.1035, including today.
The price is in the zone between the 112th and 135th degrees. This is an inversion zone, so I expect a price rebound from the 135th degree. We could’ve said that a fall to 1.1027 is not going to take place, but the euro/pound is going to correct. If my conclusions turn out to be correct, it will pile pressure on the euro/dollar. In this case, the buyers will need to retreat. From here we could risk buying euro before Friday’s NFP. Moreover since it is being supported via the minimum from 30th June.
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