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Eurodollar Risks Depart Under 1.12

Hourly

On Thursday the euro/dollar rate dropped to 1.1181 after the publication of US retail sales data that was stronger than expected. This news gave the dollar an additional impulse for a growth that had been borne on the Asian session.

The amount of retail sales in the US in May grew by 1.2% after a reassessed April growth of 0.2% (forecasted: 1.1%). The March value for this indicator was reassessed to 1.5% from 1.1%. Sales without taking into account that of cars increased 1.0% against 0.1% in April and a forecasted 0.7%. This sales growth demonstrates a recovery in the consumer sector.

The effect of the news was short lived. The euro managed to leave the daily minimum in its dust and recover to 1.1277, all of this despite the IMF refusing talks with Greece. The IMF took the decision to recall its team of experts, who were participating in negotiations with Greece, from Brussels. With their departure they shed light on a number of significant disagreements and a lack of progress. As I understood it, everyone has prepared for a Greek default, so there was no reaction.

The yield on the 10-year German bonds fell by 9.45% to 0.891%. As I’ve said more than once now, a fall in the yield means a fall in the rate of the euro.

In Asia the euro is trading around 1.1258. On the forecast I’ve considered a break from the LB with a subsequent fall of the euro to 1.1220. I’m not excluding, however, that before the weekend the euro/dollar could return to the D3 at 1.1165 (90 degrees).

At 12:00 EET the Eurozone is publishing data for April manufacturing production. At 15:30 EET the USA will publish its report for manufacturing prices in May and 30 minutes later some preliminary data on US consumer confidence will be released by the University of Michigan. Let’s now have a look at the Daily tab.

Daily

After a break in the 1.1259 minimum from 10th June, the euro/dollar has dropped to 1.1181. The euro has broken from the trend. Taking into account that the IMF has decided not to pursue further its negotiations with Greece, there’s all the more reason to believe that the euro is going to continue falling. The target for the moment is 1.1070/50. Now to the Weekly tab.

Weekly

Today is Friday. It’ll be really interesting to see where the euro closes. A close of the EURUSD around 1.1180 will pile the pressure on buyers. In this case, on Monday we’re likely to see a break in the trend, rather than a rebound.

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