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EUR/USD: expected jerking movement before Yellen speaks


On Wednesday the euro/dollar closed down. The double bottom that was forming was cancelled out during the European session after market participants began dumping American and European bonds. The yield for them was in the green zone until trade opening in the States.

During the day, the price bounced three times from various levels, but all attempts failed. After trade close in Europe, the euro bulls managed to break from the 1.0666 minimum due to the falling yield on American bonds.

Market expectations:

Today I haven’t bothered with a forecast since there are too many factors which are affecting the euro’s movements at the moment. The yields for all bonds are now falling, and so the euro is rising. It’s unclear whether investors will start chucking in bonds and currencies from developing countries. The movement for bonds is currently a key factor for the USD.

Other than the bonds, on Thursday trader attention will be on what Yellen is to say. The Fed chief’s preliminary text is to be published a couple of hours before she is to give the speech.

Day’s News (GMT+3):

  • 12:30, UK retail sales in October;
  • 13:00, Eurozone definitive October CPI and base CPI;
  • 15:30, Eurozone economic conditions assessment for monetary policy from the ECB’s last meeting;
  • 16:30, Canadian foreign securities purchases in September, plus US construction permits issued for September, CPI for October, Philadelphia Fed manufacturing index for November, new home foundations laid in October and initial unemployment benefit application for the week ending 13th November;
  • 18:00, US Fed’s Janet Yellen to speak before congress;
  • 18:30, Bank of Canada to release its biannual report;
  • 20:00, SNB’s Maechler to speak.

Technical Analysis:

Euro/ rate on the weekly. Source: TradingView dollar

I’ve put a weekly graph in this analysis to show you the situation on the old timeframes. We can see from the graph that the euro/dollar has been in a sideways trend since March 2015. The upper limit will start closing positions at around 1.0600.

Euro/ rate on the hourly. Source: TradingView dollar

Intraday forecast: minimum: n/a, maximum: n/a, close: n/a.

From a 1.0817 maximum, the pair fell 135 degrees. The buyers are attempting to force a break from this support. If we go off the weekly timeframe (above) then the sellers are aiming for 1.0600. If investors don’t ditch bonds then the buyers will have an opportunity to return the rate to 1.0743. They could push it higher since between the price and the AO a double bull divergence has formed. The question is though: whose side will Yellen be on today?


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