Trading recommendations
Sell in the market. Stop-Loss 1.0740. Targets 1.0670, 1.0600, 1.0550
Buy Stop 1.0740. Stop-Loss 1.0680. Targets 1.0795, 1.0840, 1.0900, 1.0975, 1.1050, 1.1120
Overview and Dynamics
Today is full of important economic news. At 10:00 (GMT) will be published index of consumer prices in the euro area in October. Consumer Price Index - a key measure of inflation. The tendency ECB to tighten or soften its monetary policy depends from it. The main ECB interest rate (the refinancing rate for commercial banks) stands at 0.4%. The ECB has consistently lowered the rate to the level of 4.25% in 2008 to a record low current level. In addition, the ECB continues QE program (quantitative easing) in the euro area, on a monthly basis by buying European assets in the amount of 80 billion euros (88 billion US dollars). Until now, this has not led to the desired improvement of macroeconomic indicators and increase in inflation. Therefore, the publication of the consumer price index (CPI) is extremely important in determining the future dynamics of the euro.
According to the forecast figure is expected to rise by 0.3% (+ 0.5% yoy). Any deviation in either direction will cause the outbreak of volatility both in euro and on European stock indexes. If the data will be better than expected, it has a positive effect on the euro, including a pair of EUR/USD , and vice versa. At 12:30 published information about the meeting of the ECB's monetary policy, containing an overview of developments in the financial, economic and monetary policy in the euro area. At 13:30 Unit published the most important macroeconomic indicators on US consumer price indices in October, the index of business activity in the manufacturing sector from the Federal Reserve Bank of Philadelphia in November, started building homes in the US in October, weekly data from the US Department of Labor in the number of initial claims for unemployment . The result is higher than expected indicate a weakness of the labor market, which has a negative impact on the US dollar, and vice versa. Previous value is 254 000 (257 000 forecast).
At 15:00 will begin the speech of the Fed's Janet Yellen. If Yellen can affect the subject of monetary policy in the United States, the volatility in the dollar sharply increase trade in the currency market. If the speech Janet Yellen will contain signals interest rate rise in the United States before the end of the year, the US dollar strengthened sharply on the currency market. At the same time resumed selling US and European government bonds, which caused an increase in their profitability, as well as another strengthening of the dollar in the foreign exchange market. This factor and the news background today will determine the dynamics of the euro, the dollar, and, perhaps, the entire financial market.
Technical analysis
With the opening of today's dollar is rising against the yen and European currencies but lower against the commodity currencies.
The EUR/USD remains under strong negative momentum against the background of large-scale strengthening of the dollar in the foreign exchange market. The EUR/USD has broken through yesterday, the next support level of 1.0710 (low of December 2015 and the bottom line of the descending channel) and continues to decline. The pair EUR/USD remains within the descending channel on the weekly chart with a lower limit, passing near the level of 1.0600. Indicators OsMA and Stochastic on the daily, weekly, monthly charts defected to the sellers, indicating strong downward momentum. However, on the 1-hour, 4-hour chart indicators turned on long positions, indicating the probability of short-term upward correction. The objectives of growth can become resistance levels 1.0795, 1.0840 (lows last month and EMA200 the 1-hour chart), 1.0900 (lows achieved in the referendum on the day of publication Brexit). However, only at consolidating above the level of 1.0975 (EMA200 on 4-hour chart), you can revert to the long positions in the pair EUR/USD . The breakdown level 1.0975 could signal a corrective gain to balance the line and level of 1.1120. Break the 1.1120 level (EMA200 on the daily chart, and EMA50 top line of the descending channel on the weekly chart) could trigger further growth of the EUR/USD to the level of 1.1285 (Fibonacci 23.6% retracement level of the last wave decline from 2014 highs). However, the pressure on the pair EUR/USD maintained. More preferably still look short positions, and any increase in the EUR/USD should be considered is that, as a corrective.
Support levels: 1.0600
Resistance levels: 1.0710, 1.0795, 1.0840, 1.0900, 1.0975, 1.1050, 1.1120
