Technical Analysis by Alpari

[Alpari]

Expected Return of Rate to Balance Line​

Yesterday’s Trading:

Due to the weakening of the euro against the UK pound on Friday, the euro/dollar dropped to 1.1216. Judging by the demand for the pound, the approaching UK referendum on the Brexit isn’t causing alarm amongst market participants. The referendum and the weak Eurozone data are pushing the euro down against the USD.

Market Expectations:

Today is Monday; a day where I ignore the news and always look for a movement of the rate against Friday. The euro fell on Friday, meaning today I expect it to strengthen. Since the oscillator stochastic is in the sell zone, from trade opening in Europe it’s likely that there will be a shift to 1.1220. A sharp fall in the euro will mean that the same pinbar for the day that we saw on Thursday is to form once again. The target on this is 1.1145.

Day’s News (EET):

Today is a holiday in Australia and New Zealand with the markets closed there;

11:00, German business optimism index from the IFO, indicator assessing the current situation and the index for economic expectations in April;

13:00, UK report for industrial orders in April;

17:00, US new housing sales in March.

Technical Analysis:

The euro has fallen by 1.6% over the course of 2 days. The MA line has turned downwards. The price is under the LB. Taking into account the minimum daily pinbar (1.1268) is broken, now we should count on a correction and sell euro. A growth in the pair above 1.1282 is unwanted since it will cast doubt over the pinbar coming off.

Since on Mondays I always look at movements against that of Friday, my target is at 1.1268 (45th degree) and a close of the day at around 1.1245. After a correction to the LB, on Tuesday we can consider a fall in the rate below 1.12.

 

[Alpari]

Euro Stabilised at Balance Line​

Yesterday’s Trading:

On Monday the euro/dollar restored to 1.1279 (45th degree) due to a general weakening of the dollar. The euro strengthened against the USD despite it weakening against the GBP. The pound was generating demand since, according to recent surveys, the likelihood of the UK leaving the EU has fallen below 30%.

Weak data on the US housing market came out during the American session. In Mach, sales of new homes in the US had fallen by 1.5% (forecasted: 1.0%, previous reassessed from 2.0% to -0.4%).

Market Expectations:

The euro/dollar has spent the last 12 hours trading in a narrow range near the balance line. The current flat is playing into the buyers hands since the euro/pound cross is beginning to correct after yesterday’s fall, thereby allowing it to strengthen against the US dollar. Since the pound/dollar’s upward movement is burning out, the euro has a chance to reach 1.13. This is what I reckon will happen.

Market participant attention is on the results of the US Fed open market meeting. We will know the score on Wednesday. No change in interest rates is expected. The Fed’s assessment of the global economy and their further plans for monetary policy will be important for traders.

Day’s News (EET):

11:30, UK data on March mortgage approvals from BBA;

15:30, March durable goods orders in US;

15:55, BoC’s Poloz to speak;

16:00, US housing price index for February from S&P/CS (weak indicator);

16:45, US preliminary April service sector business activity index;

17:00, US April consumer confidence and Richmond Fed’s April manufacturing activity index;

20:00, BoE’s Cunliffe to speak;

23:35, API’s report on US oil reserves for this week.

Technical Analysis:

I would rather the euro not lift above 1.1279. In this case the day pinbar for 21st April would be put in jeopardy. The sellers need to close the day below 1.1268. In my forecast I’ve gone for an intraday /\ pattern. The lower the closing price, the stronger the sellers will be. A close of the euro above 1.1305 means we can forget about a weakening of the euro and the pinbar.

 

[Alpari]

Euro Could Fall Against Aussie​

Yesterday’s Trading:

The euro dollar on Tuesday restored 61.8% from a fall from 1.1397 to 1.1216. The euro strengthened after US stats on durable goods orders came out. The stats were worse than expected and the value for February was lessened.

Orders for durable goods in March were up 0.8% against a forecasted 1.8%. February’s value was dropped from -3% to -3.1%. Without accounting for the defence industry, orders were down 1.0%, whilst a growth was expected of 0.4%. The previous value was reassessed from -2.1% to -2.3%.

After an update of the maximum, the euro/dollar by trade close in the US was back to 1.1285.

Market Expectations:

Trading in Asia saw the Australian currency at the centre of attention, with it weakening against the dollar by 120 points due to inflation data. Deflation in Q1 was a surprise for most and it gave real credence to the likelihood of an RBA interest rate drop.

The fall in the rate of the Aussie has the ability to force down the rates of other currencies against the USD. Taking into account that the euro against pound is still under pressure and the US Fed will keep their rate unchanged, I’ve come up with two different scenarios. The main one is for a fall in the euro though.

Day’s News (EET):

• 9:00, German March import prices and Gfk’s April consumer confidence;
• 11:30, UK preliminary 2016 Q1 GDP and service sector business activity in February;
• 13:00, UK retail sales according to CBI in April;
• 17:00, US incomplete housing sales in March;
• 17:30, US oil reserves for week ending 23rd April;
• 21:00, Fed interest rate decision.

Technical Analysis:

The euro is receiving support from the euro/Aussie in Asia. The wallaby is down throughout the market after the publication of Australian inflation data. The euro/dollar is trading around 1.1302. The euro/pound is trading in a sideways.

The 45th degree and the balance line are looking to be decent levels of support for the bulls and from these they will need to switch into attack. The daily stochastic has flipped up and the CCI is crossing the -100 level downward. There are signs of a euro strengthening on the horizon.

The technical picture between the old timeframes is contradictory, so before the FOMC meeting I’ve got two different scenarios. For me though, I reckon the euro will fall to 1.1255.

 

[Alpari]

Pinbar Formed on Daily​

Yesterday’s Trading:

By the end of Tuesday, the euro/dollar was down. In the first half of the day the USD was down against the majority of key currencies, excluding commodity currencies. The euro/dollar was up to 1.1615 due to a fall in European stock markets and a growth in Eurozone March producer prices.

The price was above 1.16 for no longer than 20 minutes. The weakening of commodity currencies ended up stronger than any news factor. Weak Chinese data and the Australians dropping their rates have had a negative effect on the Aussie. Throughout the day the AUD/USD fell 230 points to 0.7482. Other currencies followed the commodity currencies in weakening against the dollar.

The RBA dropped their rate by 0.25% to 1.75% due to deflationary pressures taking hold and woes regarding the Chinese economy. A fall in oil quotes piled additional pressure on the euro. The euro/dollar dropped to 1.1477.

Market Expectations:

The euro rate is returning to the 1.1437 – 1.1464 support zone which had been a resistance before Monday. The USD is down due to expectations that the US Fed will leave their rates unchanged until autumn. According to the most recent data from the CME Group, the likelihood of us seeing a rise in rates in June is 15% and 29% in July, as opposed to 33% the previous week.

On Wednesday the ADP and NFP indices in the US, plus business activeness indices in the service sector of the Eurozone will see the light of day. The US oil reserve report will be critical for the AUD and CAD.

Day’s News (EET):

From 10:15 to 11:00, service sector business activity indices for Spain, Italy, Germany and the Eurozone;

11:30, UK April construction sector business activity;

12:00, Eurozone March retail sales;

13:15, Bundesbank president Weidmann to speak;

15:15, ADP employment changes in non-agricultural sector for April;

15:30, Canadian and US March balance of trade figures;

16:45, US April service sector PMI;

17:00, US March industrial orders;

17:00, US ISM data on non-manufacturing business activity;

17:30, oil reserves.

Technical Analysis:

Yesterday’s intraday movement formed a pinbar on the daily. According to trading rules, under the pinbar’s minimum a Sell Stop is placed: a stop at the shade’s maximum and a take profit at the opening price’s minimum candle range.

The minimum has been updated in Asia. Therefore there are sale orders for traders already in. I don’t believe in the movements in Asia, so I’m waiting for a correction to the LB around 1.1515/20. It would be enough to have the week close below 1.1450, with the same bar forming on the weekly.

With pinbars, the price rarely leaves the needed direction without a rebound. The price is partially rebounding by 50-60% but the shade is fully covered according to the trend. If you’re looking to enter into short positions with euro, then do so from 1.1515/30. The target for the pinbar is 1.1380. The price level is in the region of the trend line on the hourly or between the D3 and D4.

 

[Alpari]

Thursday’s Euro Target: 1.1415​

Yesterday’s Trading:

Wednesday’s close saw the euro down against the dollar. The pair couldn’t continue its growth after US labour market data for the private sector came out. The ISM index and manufacturing orders kept the dollar from falling.

The ADP index came out much lower than expected. The weak data could lead the experts into a change of forecast downwards for the Non-Farm Payrolls. The report is out two days before the official US employment report.

The US’ March manufacturing orders were up 1.1% (forecasted: 0.5%, previous: -1.9%).

The ISM index for service sector activity in April was 55.7 (forecasted: 54.6, previous: 54.5).

Market Expectations:

The euro/dollar stabilised at 1.1486 and has been consolidating in a narrow range for 12 hours. Since a pinbar formed on the daily on 3rd May, after a sideways movement I’d take a risk to say that the price will exit downwards to 1.1415.

The key event of the week is the Non-Farm Payrolls report. The official US Department of Labor report will be out at 15:30 EET on Friday. It is expected that job creation in April will be at 200k and the unemployment level will have fallen from 5% to 4.9%. The ADP and NFP don’t have a positive correlation, so I’m not really looking at this.

Day’s News (EET):

10:30, UK housing prices for April from Halifax;

11:00, ECB’s economic bulletin;

11:30, UK service sector business activity index for April;

15:30, Canadian data on March construction permits. US initial applications for unemployment benefits for the week;

18:30, Saint Louis Fed president speaking.

Technical Analysis:

The euro/dollar has bounced to the balance line and the price returned to 1.1485 from here. The hourly indicators are in a neutral zone. Taking the 3rd May’s pinbar into account. I expect to see a weakening of the euro against the dollar to 1.1415 on Thursday. At the moment we could well drop to 1.1395 (to the trend line).

Definitely keep an eye on the euro/pound cross. The cross on the hourly has bounced to the LB. A sharp rebound upwards and the euro will start to strengthen against the USD. I reckon we’ll see a growth of the euro to 1.1507, but it’s not worth letting the buyers get any higher or the euro will rise to 1.1575 over the course of 2-3 hours.

 

[Alpari]

Euro/Dollar Trading Close to Daily Trend Line​

Yesterday’s Trading:

On Monday the euro/dollar spent the day in a 1.1374 – 1.1419 price range. The euro was consolidating underneath the LB. The dollar was hanging on to its position after Friday’s weak NFP on expectations that wage growth in the US will continue and the Fed will raise rates another two times this year. Judging by the futures for the rates, the Fed will put their rates up one more time, but no earlier than September.

Market Expectations:

The euro/dollar is trading close to the daily trend line. This is why the euro isn’t falling. For the euro to start weakening against the US dollar, the sellers need to strengthen below 1.1355. A rise of the quotes above 1.1420 will see the euro return to 1.1485. The economic calendar is empty today, so keep an eye on cross pair movements and that of stock indices.

Day’s News (EET):

9:00, German industrial production and trade balance data for March;

10:15, FOMC’s Dudley to speak;

11:30, UK external trade data.

Technical Analysis:

The euro/dollar has found itself a a rest point at the 90th degree. This level isn’t an important support, so I reckon the price will shift towards 1.1345 (112 degrees). As I already mentioned above, if the sellers don’t manage to strengthen below 1.1355, the rate’s fall will move to 1.1280 (D3 line). Any prolonged fall will be cancelled by a close of the hourly candle above 1.1419.

 

[Alpari]

Brent: Sellers Targeting $42.20​

On Monday Brent closed at $46.15 per barrel. The price gap was +1.8%. Oil was up due to the Saudi minister for oil losing his positions and the forest fires in Canada.

On 7th May, the Salman of Saudi Arabia, Salman, bin Abdulaziz Al Saud, dismissed the chief of the ministry for oil, Ali al-Naimi. The ministry for oil was replaced by the newly created ministry for energy, industry and mineral resources, headed by oil company Saudi Aramco.

Canada is on fire. The territory engulfed in flames in Alberto has reached 200 hectares. The fires have been burning since 1st May. The fires have forced oil companies to lessen extraction by 1 million barrels per day, according to Bloomberg. Specialists reckon that if the temperature and wind doesn’t die down, the fires will burn for another few months.

In the second half of the day Brent fell by 6.0% to $43.30. There was no news behind this fall. What happened was the buyers were unable to strengthen above $46.76 and a bear set up returned to the market, caused by Iranian oil minister Zanganeh, who announced on Sunday that Iran doesn’t accept the plan proposed by Saudi Arabia to freeze oil production.

Since the $44.17-44.43 support zone has been passed (see graph) and the economic calendar is empty, I’ll take a risk in saying that oil quotes will fall to $42.20. It’s possible that 42.20 is a little low for Tuesday. If the price isn’t in a rush to get to my forecasted line, then we can consider above $42.60 as a target.

 

[Alpari]

No Strengthening Factors for Euro​

Yesterday’s Trading:

On Tuesday the euro was trading mixed against the USD due to a lack of important economic data. The battle went on around the LB at 1.1390. The euro didn’t make it to the 1.1345 calculated level. Due to oil going up, the rate managed to restore to 1.1409.

Market Expectations:

The euro/dollar stopped by the trend line which passes through the 1.0821 (10/03/16) and 1.1216 (25/04/16) minimums. Taking into account the week’s pinbar and the falling star, I reckon the euro is to fall to 1.1250.

The news is little. A spike of volatility on the currency market can be expected when the UK stats come out, with it due to affect the euro/pound cross. On Wednesday I expect to see the euro fall to 1.1315. Any sustained fall will be cancelled with a rise of the quotes above 1.1410.

Day’s News (EET):

11:30, UK industrial and manufacturing production data in March;

17:00, UK preliminary GDP from NIESR for April;

17:30, US oil reserve data for week ending 7th May;

19:30, ECB representative Nowotny to speak;

21:00, US federal budget balance for April.

Technical Analysis:

The euro/dollar has been consolidating under the balance line for two days. The fall slowed near the trend line. Really, I should be looking at buying the euro from the trend line, but in my forecast I expect to see a fall. How so? I’m counting on seeing a pinbar coming off on the weekly time frame. We need some decisive factors to weigh in and force a close above 1.1609, thereby cancelling the pinbar signal. The sellers need to strengthen below 1.1350 and there it will be easier to shift downwards. A growth above 1.1409 will open the road to 1.1450.

 

[Alpari]

Update of Weekly Minimum Expected for Euro​

Yesterday’s Trading:

By the end of Thursday, the euro/dollar had closed up. On the one hand, the close of the day was at 1.1375: a positive thing for the sellers for them to continue the fall to 1.1275. On the other hand, the reasons for the dollar’s strengthening after weak US labour market data are unclear.

The euro restored to 1.1414 after the news, but it couldn’t keep above 1.1400 and fell to 1.1370. The number of applications for unemployment benefits in the US for the last week rose to 294k (forecasted: 270k). The number neared the 300k mark.

Market Expectations:

This Friday the 13th sees trader attention on Eurozone and US data. Real activity is expected on the currency market from trade opening in Europe. On Friday I have chosen a V-shaped patter: a fall to 1.1335 with a subsequent price restoral to 1.1365.

Day’s News (EET):

9:00, German preliminary Q1 2016 GDP and definitive April CPI;

12:00, Eurozone preliminary Q1 2016 GDP;

15:30, BoE’s Will Martin to speak and US to publish retail sales and producer price index for April;

17:00, US preliminary consumer confidence index for May from Michigan university.

Technical Analysis:

The euro/dollar retuned to the trend line. On Thursday the sellers managed to fully close off 11th May’s candle body. If the price bounces from the trend and returns back to it, this means we’re readying for its break and a weakening of the euro to 1.1275.

To break the trend, we need the oscillator stochastic to return to the 60-65% zone. Four hours and a rebound of the rate by 15 points will be enough for the sellers to gear up for an assault.

From the 1.1446 maximum I have specially made a trend line. If the euro rate closes above 1.1390 my forecast will become invalid. In this case the market will once again switch into a flat in a 1.1355 – 1.1445 range. I’ve gone for a V-shaped pattern this Friday: a fall to 1.1335 with a subsequent price restoral to 1.1365 (if the stats come out weak).

 

[Alpari]

Monday Against Friday​

Yesterday’s Trading:

The euro closed down against the USD on Friday. The price dropped to 1.1282 due to positive US stats. Consumer confidence and retail sales were better than expected.

The Reuters/Michigan consumer confidence index stood at 95.8 against a forecasted 90.0 and 89.0 in April. Retail sales showed an unexpected growth of 1.3% in comparison with a -0.3% fall in March and only a 0.8% rise forecasted.

Market Expectations:

I always consider movements against that of Friday on a Monday and I never look at the news. I think that the best thing for today would be a correction to 1.1335. If the euro restores to here, on Wednesday we can expect to see a fall to 1.1250.

Day’s News (EET):

• German and Swiss holiday;
• 15:30, New York Fed manufacturing index;
• 17:00, NAHB’s housing market index for the US;
• 17:30, BoC report;
• 23:00, US net long-term securities purchasing.

Technical Analysis:

Intraday forecast: minimum: 1.1290, maximum: 1.1335, close: 1.1314.

Euro/dollar rate on the hourly. Source: tradingview

The euro/dollar has found a support at the 135th degree near the D3. The zone between the 112nd and 135th degrees is inverted. On Friday the euro broke the 1.1350 support. Due to this I am not looking at a restoral above the level indicated. I am waiting for a rebound to the LB or to 45 degrees at 1.1335. If the forecast comes off on Tuesday, on Wednesday I will be looking at a weakening of the euro to 1.1250. Now we’ll take a look below at the technical picture on the daily graph.

Euro/dollar rate on the daily. Source: tradingview

The daily pinbar with a tail at 1.1616 has come off. A weekly pinbar is now starting to form and the target for it is at 1.1215.

On Friday the euro/dollar broke the trend line which runs through the 1.0821 and 1.1215 minimums. This means that the sellers have opened the road to 1.1080, to the other trend line. Along the way there are two interim levels to meet: 1.1265 and 1.1215. On the final one the pinbar will fully form and then a head will appear on the daily. The daily indicators indicate a fall for the euro.

 

[Alpari]

EURUSD: Evening Target 1.1285​

Yesterday’s Trading:

As I expected, the euro/dollar was in a correction phase throughout Monday. The euro regained against its US counterpart to 1.1342 after a reduction in New York manufacturing activity of -9.02 against a +6.50 expected rise. By trade close, the pair had returned to 1.1315. The movement fully coincided with forecasts.

Market Expectations:

Today trader attention is on UK and US inflation data. Three US Fed representatives will speak later. The day won’t be easy for the euro since the pound and Aussie are significantly up against all pairs in Asia.

The Aussie dollar strengthened 80 points following the publication of the RBAs minutes. The UK pound reacted up to the latest ORB survey for the Daily Telegraph regarding a possible Brexit.

The text of the minutes wasn’t as soft as had been expected. The regulator wanted to wait to receive additional data before dropping interest rates. The RBA took note of the improving labour market situation.

According to recent survey data, 55% of Brits want to remain in the EU. The pound/dollar rose 85 points to 1.4493, the euro/pound fell 50 points to 0.7810. Due to this the euro was under pressure in its pair with the US dollar.

With these swings the euro/dollar was able to return to 1.1338/45. During the US session I expect to see a fall to 1.1285. This is the only day when the sellers can update the minimum, afterwards traders will begin to set their positions before the US Fed’s minutes come out.

Day’s News (EET):

• 11:30, UK CPI and manufacturing inflation;
• 12:00, Eurozone balance of trade;
• 13:00, German monthly Bundesbank report;
• 15:30, Canadian changes in manufacturer sales in March;
• 15:30, US construction permits, CPI and foundations lain in April;
• 16:15, US industrial manufacturing in April;
• 19:00, FOMC members Lockhart and Williams to speak;
• 21:00, FOMC member Kaplan to speak.

Technical Analysis:

Intraday minimum: 1.1285, maximum: 1.1338, close: 1.1300.

Euro/dollar rate on the hourly. Source: tradingview

As of 6:50 EET, the market saw the euro/dollar trading at 1.1316. Taking the morning strengthening of the pound and Aussie dollar against the USD into account, I expect to see a restoral of the euro to 1.1338. I don’t write off a test of the trend line at 1.1345 either.

The pound and the Aussie have strengthened against the USD by 80 points apiece. Despite such a strengthening, I’ll take a risk for today in saying that the euro will fall to 1.1285. There’s no end to the bear trend with a 1.1616 maximum on the hourly.

 

[Alpari]

EURUSD: Minimum Could Update Before FOMC Minutes​

Yesterday’s Trading:

On Tuesday the euro/dollar closed slightly down, leaving the shade at a 1.1348 maximum. I can’t explain what caused the turnaround for the euro after the inflation report came out up. Perhaps it was because of rising oil prices.

When it became clear that the US April CPI came out better than expected, the euro/dollar fell to 1.1301.

We didn’t see any dollar rally for due to the positive manufacturing production data. The US manufacturing production index in April was 0.7% (forecasted: 0.2%, previous: -0.9%). Construction of new housing was also up, but that also couldn’t bring the dollar up with it. Yesterday’s statistical data started to be reflected in the Asian markets.

Market Expectations:

Today’s key event for the dollar is the FOMC minutes. On my forecast I expect to see a test of 1.1255/60 in the first half of the day, with a subsequent bounce to 1.1304 after the publication of the minutes.

Day’s News (EET):

• 11:30, UK labour market data: average wage changes, changes in applications for unemployment benefit, unemployment level;
• 12:00, Eurozone definitive April CPI;
• 16:30, UK March index of leading indicators from Conference Board.
• 17:30, US oil reserve changes 9-15th May;
• 21:00, US FOMC minutes.

Technical Analysis:

Intraday forecast: minimum: 1.1258, maximum: 1.1304, close: 1.1304.

Euro/dollar rate on the hourly. Source: tradingview

I wrote above that I don’t know why the euro/dollar flipped from 1.1301. By the evening the sellers had closed off all of the growth and in Asia they chased the buyers back to 1.1284. In my forecast I’m waiting for a test of 1.1260. The correctional pattern from 1.1282 indicates a continuation of the bear trend. We need to get past the 1.1282 minimum from 13th May.

From the 67th degree I reckon there’ll be a euro bounce to 1.13. Why? Well, who would want to leave short positions open before the publication of the FOMC minute. Pretty much no one expects there to be a rise in US interest rates in June. If the euro doesn’t return to 1.13 by the close of the day, ready yourself for a weakening of the euro to 1.1080.

 

[Alpari]

EURUSD: Expected Bounce to Trend Line as Part of Correction​

Yesterday’s Trading:

On Thursday the euro/dollar was trading up and down. In the first half of the day the euro dropped to 1.1179 (under pressure from cross pairs), in the second it returned to 1.1227.

The minutes from the last FOMC meeting showed that the US Fed could lift the interest rates in June if the data is there to back up such a decision. At the same time, according to the latest data from CME Group FedWatch, on Thursday the likelihood of an interest rate rise dropped from 38% to 30%. I reckon that this is to do with the fact what Fed reps Fischer and Dudley had to say. They announced that the Fed will raise rates on the basis of fundamental data. This is nothing new, but it stopped the dollar rally short.

The US index for leading indicators showed a 0.6% rise in April (forecasted: 0.6%, previous: 0.0%).

The number of initial unemployment benefit applications in the US fell from 278k against a previous 294k the week earlier (forecasted 275k).

The manufacturing activity index from the Philadelphia Fed fell by -1.8% against a 3.5% forecasted rise and a previous -1.6%.

Market Expectations:

Today isn’t really full of news. Traders will be taking trading decisions based on the US Fed minutes and the recent economic data. An inverted (V) pattern formed on Thursday.

It came off structurally weak, but if the cross switches into a correctional phase before the week’s end, the euro/dollar will correct to 1.1260. Whilst the euro hasn’t corrected to the trend, I’m not considering a weakening of the euro against the USD.

Day’s News (EET):

• 13:00, UK industrial orders index;
• 15:30, Canadian CPI and retail sales;
• 17:00, US sales housing on the secondary market in April;
• 20:05, drilling rigs from Baker Hughes.

Technical Analysis:

Intraday forecast: minimum: 1.1196 (current Asian), maximum: 1.1259, close: 1.1235.

Euro/dollar rate on the hourly. Source: TradingView

The technical picture in the euro/pound on the hourly is horrific. Such a fall of the euro against the pound leaves no chance for a correction. I’m saying that the cross will start its correction before the weekend and due to this the euro/dollar will correct to the 67th degree at 1.1259 or to the trend line which took its beginnings from 3rd May’s 1.1616 maximum. At the very least it ought to bounce to the 45th degree or the balance line.

 

[Alpari]

EURUSD: Pair Shifting to Trend Line​

Yesterday’s Trading:

On Friday the euro/dollar renewed to 1.1237. The pair ditched the session maximum after US secondary market housing sales for April showed a 1.7% rise to 5.45 million homes. On this news the euro returned to 1.12. The trading session closed near the balance line (simple average line).

Market Expectations:

On Monday the bulls have shifted Friday’s maximum to 1.1242. Asian activity is decent, only the trend line runs through 1.1252. It won’t be passed first time. It needs help from the euro/pound cross. A small correction is needed on it to offload the indicators after Friday’s growth.

Since the euro ended up sideways on Friday, today I expect to see it go to 79 points as part of the candle. I am inclined to believe we will see a break in the trend line during the American session and a strengthening of the euro to 1.1284.

Day’s News (EET):

• 10:00-11:00, Eurozone, German and French PMIs in the manufacturing and service sectors;
• 13:15, FOMC member Bullard to speak;
• 15:00, FOMC member Williams to speak;
• 16:45, US preliminary business activity index in manufacturing for May;
• 17:00, Eurozone May consumer confidence;
• 17:30, Australian index for leading indicators from CB for March.

Technical Analysis:

Intraday forecast: minimum: 1.1205, maximum: 1.1284, close: 1.1262.

Euro/dollar rate on the hourly. Source: TradingView

On Friday the euro spent 2/3 of the time near the balance line. I’ve made an upwards channel for a correctional movement from the 1.1179 minimum. There’s a strong resistance forming at the intersection of the upper line of the channel and the trend line: 1.1253. I think the bulls will drop to it in the first half of the day. Then it’s necessary to wait out a few hours under the trend line so that the oscillator stochastic can return to the 50% zone.

According to the 90th degree, today’s target is 1.1284. The 90th degree isn’t an important resistance level for the euro/dollar, so the stops could be blown off with a gentle breeze and we’d be at 1.13.

 

[Alpari]

Euro to Keep Trading Sideways​

Yesterday’s Trading:

The euro/dollar during the American session was able to restore to 1.1230 after a fall to 1.1187 at the start of the New York session. The PMI came out worse than expected, thereby aiding the euro to strengthen against the USD.

The preliminary PMI in the manufacturing sector fell in May to 50.5 from 50.8 in April (forecasted: 51.0).

Market Expectations:

The pair has been trading sideways between 1.1179 and 1.1240 for the past three days. On the daily the sellers have the road to 1.11 open. They need to pass 1.1180.

One thing deserves attention. The sellers can’t pressure the euro under 1.12 due to the weak US stats. There was a sharp upward bounce on 19th and 23rd May. I say this is to do with the technical picture on the daily. The daily indicators are indicating an upward correction. The situation is unclear, therefore it’s necessary to wait for the price to exit the price range. Today I’ve earmarked a 1.1188 – 1.1222 range. I looked over the different price patterns this morning. For me it’s a V-shape. I haven’t bothered to come up with a scenario on the graph for a break through the range, I just indicated the movement in points and as a percentage

Day’s News (EET):

• 12:00, German and Eurozone economic sentiment index from ZEW for May and UK parliamentary questions on inflation: BoE’s Carney, Broadbent, Weale and Vlieghe to speak;
• 13:00, UK retail sales from CBI for May;
• 15:00, ECB financial stability report;
• 17:00, US April new housing sales and Richmond Fed manufacturing activity in May.

Technical Analysis:

Intraday forecast: minimum: 1.1188, maximum: 1.1222, close: 1.1208.

Euro/dollar rate on the hourly. Source: TradingView

The euro/dollar is trading in a sideways trend. The trend line is squeezing the buyers from above. The buyers are trying to defend 1.1180. On Tuesday I reckon we’ll see movements within a 1.1188 – 1.1222 range. It’s not 100% that the price will keep trading between these levels. I think that the daily indicators could do with offloading. Euro sales would be best at 1.1320 – 1.1350.

 

[Alpari]

Expected Movement in 1.1175 – 1.1215 Range for Euro​

Yesterday’s Trading:

The euro bulls on Thursday tried to strengthen above the trend line and 1.1190 resistance several times but couldn’t manage it. The price constantly bounced back to 1.1165. After US stats came out, the euro/dollar upped it to 1.1216.

The US economic data came out better than expected. The euro/dollar reacted to the news by dropping 20 points and, due to growing appetite for risk, it rose to 1.1216. The buyers didn’t manage to hold at this level. The euro/dollar returned to 1.1170 following oil and gold before Yellen is to speak.

The number of unemployment benefit applications for the week ending 21st May was 268k (forecasted: 273k, previous: 278k).

Durable goods orders in the US in April were up 3.4% (forecasted: 0.4%, previous: 1.9%).

The number of signed deals for housing purchases in the US was up 5.1%.

Market Expectations:

Market participant attention today is set to be on Janet Yellen. Traders hope that she will give an indication of whether the Fed will increase interest rates. Futures for such action are currently indicating that the likelihood of an increase in rates in June is 26% (previously over 30%) and 56% in July.

The euro/dollar is trading at around 1.1185. Taking into account that the likelihood of an interest rate rise has fallen, on Friday I expect the euro to consolidate in a 1.1175 – 1.1215 range.

Day’s News (EET):

• 15:30, US preliminary GDP for Q1 of 2016;
• 17:00, US reassessment of consumer sentiment and inflation expectations from Michigan university for May;
• 19:30, Fed’s Yellen to speak;
• 20:05, drilling rigs from Baker Hughes.

Technical Analysis:

Intraday forecast: minimum: 1.1177, maximum: 1.1212, close: 1.1198.

Euro/dollar rate on the hourly. Source: TradingView

The trend line which took its beginnings from a 1.1128 minimum has had to head through 1.1158. The euro is currently trading above the 1.1180 support (grey zone) near the trend line. With the situation like it is, I wouldn’t look at the technical signals because of Yellen being set to speak. Perhaps there will be a false break of the levels and signals from the indicators.

In my forecast I’ve gone for price fluctuations in a 1.1175 – 1.1215 range. Today a V- or W-shaped patter could emerge. I’m leaning more towards the latter: a strengthening to 1.1212 and a return of the price to 1.1185.

 

[Alpari]

Expected Movement Against Friday​

Yesterday’s Trading:

On Friday the euro weakened against the dollar after Yellen spoke. The Fed chief hinted that the interest rates will be put up in the coming months. According to data from CME Group FedWatch, futures for the rate’s likelihood of being increased in June didn’t change on Friday; remaining at 28%. However, for July this increased to 61%. By trading close, the euro/dollar renewed its month’s minimum, dropping to 1.1109. In Asia the euro fell to 1.1097.

Market Expectations:

In Asia the euro fell to 1.1097. Today is a day off in the US and UK. The economic calendar is empty. Traditionally, on Mondays my forecast goes against Friday. If on Friday there was a one-directional fall, on Monday I’m looking at it doing the opposite. If there was a flat, I’d be saying we’re sitting along the trend today.

On Friday the support for the euro was at 1.1130. This level is a target region. If the sellers manage to hold the buyers back at this level, this means that we are readying for a test of 1.1080. I recommend looking at the month’s candle. With such a bear candle, we set to quickly return to 1.0830.

Day’s News (EET):

• US and UK day off;
• 15:00, German preliminary CPI data;
• 15:30, Canadian Q1 balance of payments and April PMI.

Technical Analysis:

Intraday forecast: minimum: 1.1095, maximum: 1.1132, close: 1.1121.

Euro/dollar rate on the hourly. Source: TradingView

Friday’s expectations didn’t come off. The buyers started to leave long positions before Yellen spoke. I warned that due to her speaking it wouldn’t be worth relying on technical signals. The news is causing movement on the currency market. Technical analysis will allow us to find the ideal points of entry and exit, with the stops preserving our deposit.

The euro/dollar stopped at the 90th degree. The euro loves to disappoint from the 112-135 zone. This means that it’s pretty likely we’ll see a test of 1.1084. The pair is consolidating at 1.11 for the moment. The previous three candles indicate a strengthening of the euro as part of a correction.

There’s no significant news out on Monday. It’s a day off in the US and UK. Due to the holidays, price fluctuations could be less than 40 points (expected range of daily candle).

If the sellers start to fix profit on short positions and the bulls try to strengthen above 1.1132, we won’t be able to avoid a restoral of the quotes to the 45th degree at 1.1150.

 

[Alpari]

Euro Breaks Through Trend Line​

Yesterday’s Trading:

On Monday the euro/dollar spent the evening in a sideways after reaching 1.1144. This was due to low activity due to it being a day off in the US. The time has come for traders to gear up for the ECB meeting and Mario Draghi’s press conference on Thursday. It is expected that the key rates will remain the same. The ECB should also publish forecasts for economic growth and inflation in the Eurozone.

Market Expectations:

The euro/dollar rose to 1.1154 in Asia. The GBP rally was facilitated by a rise in the price of gold, oil and other key currencies against the dollar. The Daily Telegraph in the UK published its Brexit survey conducted by the sociological service, ORB. According to the survey, the number of Brits ready to vote leave has risen to 46%, with in voters at 51%.

The tip of the balance was small, but the pound used it to rise 90 points to 1.4724. With the survey played out, the euro/dollar ricocheted back to the trend line. On Tuesday I’d risk saying there’ll be a weakening of the euro against the US dollar to 1.1115. Today the month’s candle is closing. The buyers won’t make a bull signal of it, even if they try. The target for the next two days remains at 1.1085.

Day’s News (EET):

• 10:55, German April unemployment changes;
• 12:00, Eurozone May preliminary CPI and April unemployment level;
• 15:30, Canadian GDP changes in March and Q1;
• 15:30, US April CPI, consumer incomes/spending in April;
• 16:45, US Chicago May business activity index;
• 17:00, US consumer confidence in May from The Conference Board.

Technical Analysis:

Intraday forecast: minimum: 1.1134 (current Asian), maximum: 1.1175, close: 1.1162.

Euro/dollar rate on the hourly. Source: TradingView

The euro/dollar has met a resistance near the trend line at the 15 degree Gann level: 1.1150. For the buyers to stop purchasing euro, the sellers need to get the rate below 1.1127 asap. In this case new market participants will get involved and we could see a fall to 1.1085. I limit myself to 1.1116 but here we need to keep an eye on the GBP and euro/pound cross movements. Any general dollar strengthening will see a euro fall even further than the pound. The closest target for the next two days is still at 1.1085. I expect to see trader activeness up on the American session.

 

[Alpari]

Expected Euro Fall to 1.1094 Before ECB Convenes​

Yesterday’s Trading:

On Tuesday the daily candle closed with a pinbar. The fall of the GBP didn’t allow the euro bulls to strengthen above the trend line. By the end of trading, a false break in the trend line was fixed.

The euro/dollar updated the session maximum due to American statistics and then followed the pound downwards from a 1.1173 maximum to 1.1125.

The pound/dollar was in swinging style with two surveys from the ORB and ICM on the prospective Brexit. The first showed that the number of Brits ready to vote leave has risen to 46%, with the in campaigners at 51%. The second survey showed that the number of leavers has risen to 45%, whilst inners are down to 42%.

As the referendum approaches, volatility on the pound will only increase. It’s difficult to imagine what to expect from the incoming weekly surveys at the start of each week. The technical signals for the pound won’t work well.

The US May consumer confidence index was at 92.6 (forecasted: 96.4, previous: reassessed from 94.2 to 94.7).

The business activity index of Chicago association of managers in May was 49.3 (forecasted: 51.0, previous: 50.4).

The US personal incomes index remained as was at 0.4% The US spending index rose to 1.0%.

Market Expectations:

The euro/dollar at 7:15 EET was trading at 1.1121 against a 1.1114 Asian minimum. As the ECB meeting and NFP approach, I expect a fall to 1.1097. Via a double bottom we could switch into a long upward correction from the trend line.

Day’s News (EET):

• 10:30, Swiss May manufacturing PMI;
• From 10:15 to 11:00, EU May manufacturing PMIs;
• 11:30, UK index for May manufacturing activity;
• 16:30, Canadian business activity in industry during May from the Royal Bank of Canada;
• 16:45, US industrial activity index in May;
• 17:00, US ISM business activity index in manufacturing throughout May, spending on construction in April, ISM manufacturing prices in May;
• 21:00, US Beige Book out.

Technical Analysis:

Intraday forecast: minimum: 1.1094, maximum: 1.1152, close: 1.1110.

Euro/dollar rate on the hourly. Source: TradingView

The euro/dollar in Asia has found a support at the 45 degree Gann level: 1.1120. Yesterday’s spike on the daily is a bearish pinbar. After this the price often reverses and only then it heads for the minimum.

In our case we have the pinbar minimum broken, but, nevertheless, the likelihood of a return of the price to the trend line due to a strengthening of the Aussie dollar (after decent Australian stats) is still on the cards.

The important day for the euro is Thursday. I reckon the euro/dollar is to drop to the trend line before Draghi speaks. If 1.1095/97 is reached then a bounce will start a double bottom off.

 

[Alpari]

Euro Returns to 1.12 Before ECB Convenes​

Yesterday’s Trading:

As the ECB meeting approaches the euro lifted to 1.12. The price returned back to 1.1150 twice during the American session after stats came out. However, the high demand for the euro in the crosses allowed the euro bulls to win back of the losses from the news.

The preliminary data from ISM showed a May growth. The index for business activity in the manufacturing sector from ISM rose to 51.3 (forecasted 50.4, previous: 50.8)

The buyers received a powerful support from the euro/pound cross rate. The results from the most recent Brexit poll piled pressure on the pound. The pound/dollar crumbled to a 1.4385 minimum. Judging by the pound sales throughout the market, market participants are anxious that the UK could leave the EU. I think that the surveys are to manipulate the markets and earn money from this.

Market Expectations:

In Asia the euro jumped to 1.1213 for a short while The bull impulse didn’t receive a continuation. The pair is currently correcting. On Wednesday the buyers overcame two important levels – 1.1156 (trend line) and 1.1185 (resistance). A break is marked out on the graphs with circles. These are bull signals.

Traders are waiting for the results of the ECB meeting and Draghi’s speech. He will present reassessed forecasts for economic growth and inflation. Mario Draghi always has a strong effect on the euro/dollar rate. He can send the rate 400 points up, just as he can send it 400 points down. His speech could increase your deposit or take it to zero. Since the technical signals are useless because of the fundamental ones, today my review is without a forecast.

Day’s News (EET):

• 11:30, UK PMI in construction sector for May;
• 12:00, Eurozone April producer price index;
• 14:45, ECB interest rate decision;
• 15:15, US May employment changes (excluding agriculture) according to ADP;
• 15:30, Mario Draghi holds a press conference, US initial unemployment benefit applications for the week ending 29th May;
• 15:35, FOMC member Powell to speak;
• 18:00, US oil reserve changes;
• OPEC summit.

Technical Analysis:

Intraday forecast: minimum: n/a, maximum: n/a, close: n/a.

The euro/dollar broke two important levels. The break is marked out on the graph. After a break in the trend line, the euro strengthened to 1.1213 with support from the crosses. The growth in the pair slowed by the resistance line which runs through the maximums. A triangle shows the important limits on the graph. A support runs through 1.1189 along the lower limit.

Taking into account the fact that the euro is overbought against the pound (trading by the U3 line of the MA channel), it’s highly probable that we’ll see a downward correction for this cross.

During Draghi’s speech a lot of volatility is expected. The range of fluctuations for the euro/dollar could be from 100 to 200 points. The US on Friday will publish its labour market report. Due to external factors, Thursday and Friday are risky days to trade.