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Euro on Monday: Expect Correctional Movement

Last week the euro/dollar dropped 399 points (-3.62%) from 1.1002 to 1.0603. Pressure on the euro weakened towards the end of the day. Profit making on short-term short positions before the weekend offered support to the pair.

In Asia on Monday the euro/dollar dropped to 1.0584. Chinese data on foreign trade disappointed market participants. The Australian dollar reacted with a sharp fall by 70 points and dragged the euro/dollar and pound/dollar pairs down with it.

According to the published data, Chinese imports in March fell by 12.3% in comparison with the same period a year earlier (forecasted -11.7%, previous -20.5%). Exports fell by 15.0%, although economists expected them to grow by 12.0%.

The risks leaned towards favoring a reduction in the euro.  When the minimum renews at 1.0461, the pair moved towards 1.0200. Today I’m sticking by my usual: I’m forecasting movements against those of Friday.

The macroeconomic calendar is empty. In the current conditions I expect the euro/dollar to rebound to the 1.0630 – 1.0645 zone and then kick start the euro sales from the LB balance line. If you’re selling, keep an eye on the risks since one bull divergence has already formed. With the second, the risks for a rebound to 1.0680 will grow.

If you don’t manage to fix your profit in a short position in time when the euro falls, when it rebounds you may incur losses. Or you’ll have to wait it out until a correction. On the daily price model they should remain under the trend line. Despite a big reduction in short positions by the big speculators, if it steps to 1.0486, I don’t expect there to be a deep correction.

 

13 April, 07:23 (GMT+3)
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Forecasts which are made in the review constitute the personal view of the author. Commentaries made do not constitute trade recommendations or guidance for working on financial markets. Alpari bears no responsibility whatsoever for any possible losses (or other forms of damage), whether direct or indirect, which may occur in case of using material published in the review.

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