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The rise in the stock markets and the price of oil on Wednesday facilitated a strengthening of the commodity currencies and, via them, the euro. The price of Brent again surpassed the psychological $50.00 per barrel level.
A complex correctional formation has formed for the euro/dollar on the hourly. It will last a while, whilst it’s not completed on the daily timeframe - where it has only just begun.
Market Expectations:
I expect to see the day close down. There is only one meaningful event for me today: the ECB minutes for their monetary policy meeting, which come out at 14:30 EET. After two days of the euro strengthening, a one-day correction is needed. The target for the close of the day is at 1.1070. A close below 1.1040 will put any further restoral of the euro into question.
Day’s News (EET):
- 09:00, German May retail sales;
- 10:00, Swiss June index for leading indicators from the Kof;
- 10:55, German May unemployment changes;
- 11:30, UK balance of payments, definitive GDP and business investment data for Q1 of 2016;
- 12:00, Eurozone June preliminary CPI;
- 14:30, ECB minutes for their monetary policy meeting;
- 15:30, Canadian April GDP, May industrial goods price index;
- 16:45, Chicago June business activity.
Technical Analysis:
Intraday forecast: minimum: 1.1070, maximum: 1.1127 (current day), close: 1.1076.
My expectations yesterday of a bottoming out rang true. The euro/dollar restored to 1.1130. At 7:17 EET the price was 1.1101. I reckon today has a rise to 1.1166 on the cards, but the week’s patterns (the window of 5 trading days) due to the historical data have forced me to go against it. The indicators aren’t looking to ripe for a break either. With the AO in such a state, it’s possible we’ll see an unsuccessful test of 1.1130 and a fall.
I reckon that today would be better for the price to sit in a 1.1070-1.1130 corridor. If the euro strengthens above 1.1130, on Friday I will consider a further strengthening of the euro against the USD. The bullish trend is forming without any sharp rises or falls so that the bulls will be able to fully cover the fall from Brexit. A perseverance of the upward trend – 70 points per day – will see the buyers win back their losses by 11th – 12th July. A close of the day below 1.1040 will put further strengthening of the euro in doubt.