On Monday the 8th of January, trading on the euro/dollar pair closed down. The euro dropped to the 1.1956 mark. Sellers came out to play as the European session opened and managed to bring the price back down below 1.20 by closing time.
The US dollar rose across the board. In addition to the technical correction, the dollar was bolstered by the comments of 2 FOMC members; Raphael Bostic and John Williams.
Williams, the president of the San Francisco Federal Reserve Bank, said over the weekend that the Fed should raise interest rates three times this year. Bostic revealed that the central bank is envisioning 2 – 3 rate hikes in 2018 depending on inflation.
Day’s news (GMT+3):
Fig 1. EURUSD hourly chart. Source: TradingView
Sellers refrained from accumulating positions during the consolidation phase around 1.2035. They went on the attack at the beginning of the European session. On Friday, they broke through the TR1 trend line and then through the TR2 on Monday.
The euro’s decline slowed down around the 112th degree. As the euro fell below 1.2000, this created a double top formation on the 4H timeframe. For this, the closest targets are 1.1945 and 1.1911.
My forecast will limit itself to 1.1945 given that the dollar is currently trading down against the majors in Asia. Should the dollar rise again, and all the major euro crosses decline, we can place 1.1925 levels at the 135th degree firmly in our sights.