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Expected Euro Correction in Region of 1.0915


At the American session on Tuesday, the US dollar continued its growth throughout the market. The EUR/USD renewed its minimum after the release of a set of statistics from the US which included data on orders for durable goods, consumer confidence and sales of new houses.

The April US index for orders of durable goods was 0.5% (forecasted -0.4%, previous reassessed from 4.7% to 5.1%).

The April US index for orders of durable goods, excluding military and aircraft goods, was 1.0% (forecasted 0.3%, previous reassessed from 0.6% to 1.5%).

The number of sales of new houses in April in the US was 517,000 (forecasted 510,000, previous reassessed from 481,000 to 484,000).

The May US consumer confidence index was 95.4 (forecasted 94.9, previous reassessed from 95.2 to 94.3).

The euro rate fell to 1.0862. At 7:26 EET the euro was trading around 1.0880. What can we expect from Wednesday? Based on the forecasts, I expect a correction to the balance line at 1.09315/20. Since a bull divergence is forming, according to the AO indicator, a correction to the 67th degree is possible. I’m limiting it to a growth to the 45th degree, since Greek debts are putting pressure on the euro. If the bears will be aggressive at the opening of the Eurozone trading session, there’s a risk it will go down to 1.0835. This is given that the MA is heading downwards and signals for euro sales are forming on the daily.

GBP/USD Hourly Graph


The euro/dollar has dropped to 1.0862. 1.0840 will be the support. I’m not yet considering any movement lower. To take the rate to 1.0650, there needs to be a consolidation over the course of 2-3 days. I don’t quite like the look of the stochastic for sales of the euro.

GBP/USD Daily Graph


The euro/dollar has creeped closer to the trend line. It’s set up in such a way that we can put a line through the peaks of 1.1051 and 1.1466. We can then add a parallel line to the 1.0520 minimum. The result is a downward channel (see daily graph). If the sellers don’t pass through it, the next target is 1.0650. The potential for a drop is looking bob-on.

GBP/USD Weekly Graph

27 May, 15:14 (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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