Despite the possible Greek default, the euro/dollar rate on Monday closed with a growth. The Greek serial is becoming quite monotonous and so traders are focused more on American statistics before the Fed convenes. Monday movements against Friday’s didn’t pan out.
Pressure on the dollar came from negative data on manufacturing production and a reduction in American bond yields. May US manufacturing output fell by 0.2% against -0.5% the previous month (reassessed from -0.3%, forecasted 0.3%).
As for the head of the ECB, Mario Draghi’s speech, it did not have a negative effect on the euro. He said that the previous statistics indicated a recovery of EU economies and by the end of the year it should speed up, as should inflation.
Main news of the day:
On Tuesday there’s a bit of news planned. From the graph of historical time periods, one can see that the eurobulls are gearing up to return to the trend line at 1.1340/50. I’ve not taken the news into account in my forecast. I’ve relied more on price patterns and indicators. The statistics from Germany and the UK, and any information coming out about Greece, could change the mood of market participants at any moment or strengthen movements in the same direction of that of yesterday on the American session.
The key event of the week for the market is still the FOMC meeting on Wednesday.
On the hourly graph I made an upward channel. Through the 1.1150 and 1.1189 I drew a line. I put a parallel line to the 1.1296 maximum. By the end of the European trading session the target will project from it to around 1.1370. Then I make a line through the 1.1277 and 1.1296 peaks. The projection of this line forms a resistance in the region of 1.1340. Through this resistance goes the daily trend line. If the eurobulls are not able to pass the 1.13 level (90 degrees), the pair will shift to the LB. The support passes through 1.1240. To stop the buyers and force them out of their long positions, a strengthening below 1.1240 is necessary.
The sellers weren’t able to take advantage of the break up in talks with Greece. Weak data from the US has nudged the euro/dollar to 1.13. All that’s left is to wait for a return of the rate to the trend line, if they will be able to wait. Have a look at the stochastic. There’s some bearish divergence going on. Taking into account the Greek situation, I wouldn’t risk buying euro. If you’re going to buy, make it British. Now let’s have a look at the weekly.
Monday closed with a growth. For the sellers this was a negative factor since the euro can strengthen until Wednesday. The media has prepared the market for a Greek default so traders are pretty much not bothering to react to the negative information about the talks. Here I’ve nothing else to add. The week has just started.
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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.
Director of Alpari's analytical department
## ojimadu position
Senior Alpari analyst
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