Yesterday’s Trading:
By the end of Thursday, the euro/dollar had closed up. On the one hand, the close of the day was at 1.1375: a positive thing for the sellers, for them to continue the fall to 1.1275. On the other hand, the reasons for the dollar’s strengthening after weak US labor market data are unclear.
The euro restored to 1.1414 after the news, but it couldn’t keep above 1.1400 and fell to 1.1370. The number of applications for unemployment benefits in the US for the last week rose to 294k (forecasted: 270k). The number neared the 300k mark.
Market Expectations:
This Friday the 13th sees trader attention on Eurozone and US data. Real activity is expected on the currency market from trade opening in Europe.
Day’s News (EET):
9:00, German preliminary Q1 2016 GDP and definitive April CPI;
12:00, Eurozone preliminary Q1 2016 GDP;
15:30, BoE’s Will Martin to speak and US to publish retail sales and producer price index for April;
17:00, US preliminary consumer confidence index for May from Michigan university.
Technical Analysis:
The euro/dollar retuned to the trend line. On Thursday the sellers managed to fully close off May 11th's candle body. If the price bounces from the trend and returns back to it, this means we’re readying for its break and a weakening of the euro to 1.1275.
To break the trend, we need the oscillator stochastic to return to the 60-65% zone. Four hours and a rebound of the rate by 15 points will be enough for the sellers to gear up for an assault.
From the 1.1446 maximum I have specially made a trend line. If the euro rate closes above 1.1390 my forecast will become invalid. In this case the market will once again switch into a flat in a 1.1355 – 1.1445 range. I’ve gone for a V-shaped pattern this Friday: a fall to 1.1335 with a subsequent price restoral to 1.1365 (if the stats come out weak).
