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%, while 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 center 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 the 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 23rdApril;
- 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 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.
