The EURUSD pair is currently in the red, trading at around the 1.2324 mark as we await the opening of the European session. This marks a 64-pip drop for the euro for the euro from yesterday. The euro’s decline against the greenback over the last few days has facilitated a rise on the US dollar index (DXY) from 89.23 to 89.79.
In my opinion, the EURUSD pair has been declining since the end of last week because there are no real growth factors for the euro from its current levels.
Today’s newsfeed is rather substantial. IHS Markit will publish its preliminary PPI data for February for the Eurozone (12:00 EET) and US (17:45 EET). The British ONS is set to publish a set of employment figures for January at 12:30 EET, including average earnings and the unemployment rate. Additionally, at 17:15 EET the inflation report hearings will begin, with several members of the MPC set to speak. At 22:00 EET, the US Fed will publish the minutes of its latest meeting on monetary policy, which took place from the 30th to the 31st of January. Given the number of important developments today, I’m expecting to see a more dynamic trading session.
On the 4-hour timeframe (H4), the EURUSD pair is trying to break through the upwards trend line:
If there is a breakout of this line, the sell signals on the euro will get stronger. As such, on the hourly, timeframe (H1), there will be a higher likelihood of the pair continuing its decline to the levels seen during January’s consolidation period (1.2190 – 1.2290) (scenario S1 below):
Still, if today’s data and the FOMC minutes knock the dollar bulls off course, the EURUSD pair could bounce at least to the low level (1.2350 – 1.2390) within the double top (scenario S2), formed at the end of January.