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EURUSD: the euro is expected to drop to the Lb balance line


On Friday the 16th of November, trading on the euro closed up against the US dollar. From the Lb line, the price rose to 1.1420. Fed Vice Chairman Richard Clarida acted as a support for the euro and put pressure on the US dollar. He believes that there are signs of a slowdown in the global economy and that the Fed should include the slowdown in its economic forecast. The yield on 10-year bonds in the US fell by 1.9%, to 3.06%.

President and CEO of the Federal Reserve Bank of Dallas Robert Kaplan said that the US economy is in better shape. At the same time, he noted that an economic slowdown in Europe and China may affect the US economy.

Day's news (GMT+3):

  • 12:00 Eurozone: current account s.a (Sep).
  • 13:00 Eurozone: construction output s.a (Sep).
  • 14:00 Germany: German Buba Monthly Report.
  • 18:00 US: NAHB housing market index (Nov).

Fig 1. EURUSD hourly chart.

Current situation:

On Friday, the euro/dollar closed up. Our expectations for Friday were fully justified. Growth stalled in the area around 112-135 degrees. At the time of writing, the euro is trading at 1.1402. Most major currencies are trading in the red. Since the Stochastic Oscillator is in the buy zone, it is likely that trading will remain flat or rise to 1.1420. I believe it will remain flat because of crosses with the euro. They are showing mixed dynamics.

The economic calendar for Monday is empty, so I would venture to consider the movement on Monday against Friday. I'm waiting for the euro to weaken to the 45th degree (1.1368). If buyers allow sellers to reach the Lb and 45th degree, then the risks will increase, to drop to 1.1335. For buyers, it would be better if the price increased from the current level.

On the 21st of November, the European Commission must respond to Italy's 2019 draft budget. Any negative news will send the euro into an downtrend.

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