Trading on the euro/dollar pair has closed down for the 3rd day in a row. This downwards correction comes to 173 pips. The euro has come under pressure after news from Japan (via the EURJPY cross), growth in US bond yields, as well as some technical factors.
The Bank of Japan has reduced its purchases of long-dated bonds, which traders have taken to mean that the bank is winding down its stimulus program this year. US bond yields have risen from 2.48 to 2.56 (+3.2%).
Aside from the above, traders had some other negative factors in mind during the downwards correction, namely the upcoming parliamentary elections in Italy as well as the difficulties in forming a government in Germany. In the US session, the euro dropped to 1.1916 and the pair is currently going through a correctional phase.
Day’s news (GMT+3):
Fig 1. EURUSD hourly chart. Source: TradingView
My predictions for yesterday rang true. The bears reached both their targets (1.1945 and 1.1925). Since the euro crosses were also trading down, our main pair didn’t experience any intraday rebounds.
A correction has started from 1.1916. Sellers have been trying to break this level down for 4 hours, to no avail. Judging by the hourly indicators, the correction seems to be over, so today I’m predicting a drop to 1.1900. I don’t think our pair will drop any further than this given that the TR3 trend line has been broken through.