Previous:
After the Brexit vote the euro/dollar fell five figures (-4.51%) to 1.0911. As soon as the official results of the voting were out for all to see, the currency market began a correction phase.
The referendum has been and gone. The peak of volatility has passed and now an extended flat awaits. The rebound was 277 points. It’s not bad for a start. Now the price needs to return to the LB which passes through 1.1208.
Market Expectations:
Today is Monday. Mondays always see me looking at movements against those of Friday. If the euro weakened on Friday, that means I expect it to rise today. Since the intraday volatility on the market remains high, I expect to see a rollback to 1.1115. At the moments we could see a bounce to 1.1154. Scotland’s First Minister Nicola Sturgeon announced that the nation intends to veto the Brexit results. Scotland is not happy with the fact that the UK is to leave the EU. The bigger the backlash, the less likely the UK will leave the EU. The referendum doesn’t have any legal authority; it is just a way for citizens to express their views on a certain subject. This is all the more important considering the slightness of the victory.
Day’s News (EET):
- 15:30, US May goods balance of trade;
- 16:45, US June preliminary service sector PMI;
- 20:30, ECB’s Draghi to speak.
Technical Analysis:
Intraday forecast: minimum: 1.0982, maximum: 1.1118, close: 1.1065.
The euro/dollar is trading off the charts; below the MA of the D4. There is no important macroeconomic data planned for Monday, so I expect to see a correctional movement to the 112th degree. At 20:30 Draghi will speak. It will be interesting to hear what he thinks about the situation with the UK and what measures the bank is set to take.