On Tuesday the 3rd of April, trading on the euro/dollar pair closed down. The daily patterns from the 2nd and 3rd of April are very similar, although the fundamentals behind them are different. In Europe on Monday, buyers reached a new session high before sinking to new lows. Then, on Tuesday, the euro jumped to 1.2335 before dropping to 1.2254 (-81 pips).
The dollar made gains across the board thank to a rise in US bond yields and the improved performance of the US stock market. The stock market’s decline was reversed by US President Trump’s remarks, who said that he has great respect for President Xi, but that it won’t stop him from addressing the US’s trade deficit with China.
Day’s news (GMT+3):
Fig 1. EURUSD hourly chart. Source: TradingView
I was right yesterday about the price rising by 45 degrees, but I was wrong about the correction continuing into Wednesday’s European session. After reaching a new high, market developments came in thick and fast. In the US session, the euro dropped from 1.2335 to 1.2254.
The 67th degree came into play as a support. Over the last 12 hours, the pair has corrected from 1.2254 to 1.2287. Judging by the technicals, the pair is set to decline. My forecast expects the euro to drop against the dollar to 1.2254.
The picture on the euro crosses is mixed. The main EURGBP cross is currently trading down. If the dollar rally recommences and the crosses start declining, we should see the EURUSD pair drop at least as far as 1.2240. If the drop intensifies, we can take the 112th degree as out target (1.2207).
The economic calendar is particularly full today. This means that there should be very high volatility in the US. Ahead of the NFP report, trader attention will be turned towards today’s ADP report. The NFP report is important for the US Fed. As such, I think the euro will be experiencing pressure up until trading closes in Europe.