On Thursday the 7th of September, trading on the euro closed up. Mario Draghi’s press conference was the key event of the day, and volatility on the market surged as he was speaking. Everyone heard what they wanted to hear, but the bulls overpowered the bears.
Draghi didn’t say anything new. He remained silent on the strength of the euro; although he did say that volatility on the euro is a source of uncertainty in the Eurozone and that the ECB was closely monitoring its fluctuations. Draghi also announced that most of the decisions regarding the reversal of the QE program would be made in October. The bank’s economists upgraded their GDP forecast for 2017 from 1.9% to 2.2%.
On Draghi’s comments, the euro jumped to 1.2060 compared to 1.1917 when trading closed in New York on Wednesday.
Day’s news (GMT+3):
EURUSD rate on the hourly. Source: TradingView
The daily price range on the 7th of September’s candlestick was 146 pips. Buyers met with resistance at around the 180th degree and the U3 moving averages line. If the price didn’t break through this line during Draghi’s speech, it’s very unlikely to happen today.
So, how can we make sense of current affairs? First of all, the first thing that comes to mind is the formation of a triple top beneath the U3 line. If you have an MA line on your chart, take a look at the price dynamics from the 25th to 29th of August.
Another possibility is that in the case of a lack of news and a lack of will from buyers to take profit on their long positions, we could see a correction to the 45th degree at 1.2038. I’m forecasting a rebound from this level, but we need to keep an eye on trading volume. If volume is low, the downwards correction should continue to the LB balance line, to around 1.2010.
Could the euro/dollar go up? It’s possible. The price could climb without volume to 1.2130 to form a bearish divergence. The euro is rising against the US dollar, the pound, and the Canadian dollar, while falling against the franc, yen, and the Aussie and Kiwi dollars.