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On Tuesday, trades for the euro finished up. The euro bulls didn’t manage to hold at 1.1126 since the euro was under pressure from the euro/pound cross. Due to a stabilisation of the political situation in the UK, the pound strengthened 300 points against the dollar and 526 against the yen. The euro/dollar returned to the balance line at 1.1060.
The change of prime minister in the UK is taking place exceptionally fast. Cameron is handing the keys to number 10 Downing street over to Theresa May today. Comparisons have already been drawn between the new PM and “the iron lady,” Margaret Thatcher. “No-on can be like her, Margaret was unique,” countered the new premier to be.
Market Expectations:
The euro/dollar is trading at 1.1060. During Asian trades, the pound/dollar updated the weekly maximum. The euro/pound cross is trying to develop a correctional movement from 0.8299. The key event of this week will be the BoE meeting, so on the crest of the cross’ correction, I expect a revival of the euro/dollar to 1.1109.
Day’s News (EET):
- 11:30, Bank of England’s credit financing conditions review;
- 12:00, Eurozone industrial production in May;
- 17:00, Bank of Canada’s monetary policy report and July interest rate decision;
- 17:30, US oil and gas reserves for the week ending 9th July;
- 18:15, Bank of Canada press conference;
- 21:00, US Fed’s Beige Book and US federal budget balance for June.
Technical Analysis:
Intraday forecast: minimum: 1.1053 (current Asian), maximum: 1.1109, close: 1.1100.
The euro/pound has returned the euro/dollar to the LB with its fall. I reckon that the 300 point strengthening of the pound against the dollar isn’t right. Due to a correctional movement on the euro/pound, I expect a 45 degree growth in the euro/dollar from a 1.1053 minimum. By trading close in Europe, the sellers could update the minimum. The sharper the growth is, the higher the likelihood of a break in the 1.1120-1.1125 resistance zone.