On Wednesday the euro was weak until 15:30 EET. The euro was under pressure after the release of German and European GDP data. Economic growth in the Eurozone and in Germany was lower than expected. The index for April US retail sales gifted strength back to the eurobulls. The euro/dollar rate grew by 150 points to 1.1382. After the close in Europe, the market began correcting itself.
April retail sales didn’t meet expectations. April US retail sales stood at 0.0% (forecasted: 0.2%, previous 1.1% - reassessed to 0.9%). The US April index for retail sales without taking into account car sales was 0.1% (forecasted: 0.5%, previous 0.7% - reassessed to 0.4%).
10 year German bonds
News from the US had a negative effect on the rate of the dollar. After the release of all news, the euro was receiving support from the growth in German bond yields. Over the course of 4 weeks the percentage yield grew by 14.8 times to 0.727% (+1383.6%).
Despite the last NFP (Non-Farm Payrolls) report, new macroeconomic data in the US is continuing to disappoint investors. The EUR/USD rate is repeatedly staying above the U3 line. The pair has returned to the U3 from 157 degrees and the U4 line.
From the U3 line it makes sense to consider a slide to the LB. But I’m not. Why? The calendar is bare and there’s no bear divergence. What will interfere with it going to 1.1415/20? Nothing.
Yesterday I wrote that the 5th little wave at 1.1391 was a peak and that I’m not looking at euro growth higher than 1.1391. The maximum still hasn’t been rewritten, but there’s still the likelihood that it’ll be tested today. For those who aren’t so familiar with wave analysis: wave B can occur higher than the tip of wave 5. However, the peak of wave B should not be higher than 1.1450 (123.6% from wave A).
Whilst there’s no new maximum, the euro could even form a double top. And why not: if there’s a sharp rebound from 1.1390 or 1.14, it’s worth considering.
It’s understandable that weak reports on the US economy have untied the hands of the eurobulls and they are moving northward to the trend line. Their target is 1.15. European QE and Greek debt problems have slipped out of sight. In any case, I’m looking at an inverted V shape for today. If the market goes as I forecast, a pin-bar will form on the daily. In which case, plans for a fall in the euro are valid, but, for the moment, the balance is tipped in favor of buyers.
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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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