Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Euro: Correction Could Halt Decline

Published 11/25/2021, 07:40 AM
Updated 06/09/2021, 02:00 AM

All macroeconomic reports from the US failed to meet the forecast. Nevertheless, the US dollar continues gaining in value.

Thus, the US durable goods orders declined by 0.5% instead of rising by 0.3%. The report on the durable goods orders was considered the main event of the day that should have shaped the market sentiment. A drop in the indicator should have led to an absolutely different result.

In fact, other indicators affected the market situation. Most of them were expected to remain unchanged. For example, the number of first-time claims decreased by 71,000 instead of dropping by 6,000. The number of continuing claims slid by 60,000, whereas economists had foreseen a smaller decline of 39,000. As a result, the indicator showed a significant drop, thus offsetting a disappointing report on durable goods orders.

In addition, the US new home sales added 0.4%. Although it is an insignificant rise, it had a completely different effect on the market since analysts had expected a decrease of 2.0%. Initially, analysts had predicted a small increase in durable goods orders, just minor changes in unemployment claims, and a slump in new home sales.

In fact, durable goods orders tumbled, the number of unemployment claims significantly slid, and new home sales continued climbing. In general, the released data was still positive, thus boosting the US dollar.US durable goods orders.

Today, the market is likely to be stagnant because of the celebration of Thanksgiving Day in the US and an absolutely empty macroeconomic calendar in Europe. After a short-lived hovering within the range of 1.1225/1.1275, the EUR/USD pair broke the lower limit. As a result, the pair continued falling, thus boosting the volume of short positions.

On the daily chart, we see an inertial movement. In the last two weeks, the euro has lost over 3.5%. Such a significant change in a short period of time points to oversold conditions and may cause a technical correction. On the four-hour and daily charts, the RSI technical indicator is moving along the 30 line, thus proving the oversold signals.

Outlook

Since the euro/dollar pair has significantly dropped and a correctional movement has not started yet, the downtrend is likely to slacken. In this case, the pair may either stagnate or climb by 100 pips. The area of 1.1160/1.1180 is acting as support for sellers.

In terms of the complex indicator analysis, we see that technical indicators are signaling buy opportunities in the short-term period amid the expectations of a rebound. On the four-hour and daily charts, technical indicators are providing sell signals amid the ongoing downward movement.

EUR/USD price chart.

InstaForex Group

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.