On Friday the 23rd of November, trading on the EURUSD pair closed down. The single currency shed 94 pips against the greenback to hit a weekly low of 1.1327. The pair’s slide was the result of disappointing data from the Eurozone and Germany, as well as increased demand for the dollar on the back a renewed retreat from risky assets ahead of the weekend. As US markets were operating on a shortened schedule due to the Thanksgiving holidays, there was nothing to stop the bears from hitting fresh lows.
Day’s news (GMT):
Fig 1. EURUSD hourly chart.
The euro lost ground against the dollar on Friday. My expectations of a drop and a breakout of the trend line were proven correct.
The euro started recovering its losses in Monday’s Asian session. In my forecast, I expect to see movements against Friday’s up to 1.1380. I thought that the euro and pound would start rising as soon as trading opened. Over the weekend, the leaders of all 27 EU member states convened in Brussels and reached a deal on the UK’s terms of exit. The pound barely reacted to this news as this had been expected. Clearly the bulls are saving their energy for later when the British parliament ratifies this deal.
ECB President Mario Draghi will give a speech to the European parliament’s monetary policy committee today at 17:00 (EET). Ahead of this, starting from 15:00, board members Novotny and Cœuré will also give speeches.
I can’t see anything getting in the way of a correction to 1.14 today, except for the balance line and 45th degree. The situation in Italy isn’t currently having any effect on markets, but you should remain vigilant all the same if you have a long position.