On Monday, trading on the single currency closed down. As trading got underway in Europe, buyers attempted to gain a foothold above 1.1550 on the back of an increased appetite for risk. Demand for the euro rose against the backdrop of rising Chinese stocks and the EURJPY cross. After hitting a session high, the euro slumped to 1.1456 as fears over Brexit negotiations and the Italian budget gripped the market. Italian 10-year bond yields once again rose above the 3.5% mark.
Day’s news (GMT+3):
Fig 1. EURUSD hourly chart.
Yesterday turned out exactly as I expected. We got a correction on the euro from 1.1550 to 1.1456. The drop came to an end at around the 67th degree. The bears tested this level at the opening of the European session. I see markets behaving in a similar way to yesterday, when the euro made a hew high before dropping. The fundamentals haven’t changed, but something tells me that the euro is going to rise from 1.1440 to around 1.1500-1.1508 (high probability of mirroring the growth from 1.1433 to 1.1550). If we see some sharp growth, I won’t rule out a rise to 1.1523.