Wednesday saw the euro/dollar close down. The main fault of the fall lies with the British pound which fell by two figures. Sales of the pound were caused by the publication of a UK inflation survey. According to YouGov, the year expectations fell from 1.6% to 1.4% which could lead to a delay of an interest rate rise by the Bank of England. The dollar then received support by some US stats and a growth in stock indices.
The base index for durable goods orders in the US stood at 0.6% (forecasted: 0.4%, previous: reassessed from 0.6% to 1.0%). The total volume increased by 2.0% against a forecasted -0.4% and previous 4.1% (reassessed from 3.4%).
The situation on US stock markets is stabilizing. By Wednesday’s close, the DJIA lifted by 619.07 (3.95%) to 16,285.51 points. The S&P 500 closed up by 72.9 (3.9%), reaching 1,940.51 points. The Nasdaq composite closed up by 191.00 (4.24%) to 4,697.50 points.
First the euro/dollar rate fell to the D4: 1.1351. Then, after a correction to 1.1437, the rate followed the pound by falling to 1.1291.
Main news of the day:
- At 8:45 EET, Switzerland is releasing Q2 GDP values;
- At 15:30, the USA is releasing its weekly report on initial unemployment benefit applications and a revised Q2 GDP value;
- At 20:00 EET, an economic symposium will take place at Jackson Hall.
News worth a look at on Thursday includes revised US Q2 GDP data. The data will have a real effect on the market if it is reassessed. Technical analysis should come off today.
- Intraday target: maximum: 1.1375 (in States: 67 degrees), minimum: 1.1305 (Europe), close: 1.1334;
- Intraday volatility for last 10 weeks: 119 points (4 figures).
After a two-week fall of the euro, I am more inclined to believe in a return of the price to the LB. The longer the price is so off the scale, the more powerful rebound to the trend will be. The euro/dollar returned to the MA channel in the last hour. It was a rebound of 45 degrees. From here it’s possible that it will slip down to 1.1305. Then it will head back upwards. Since the oscillator stochastic is up, the direction will depend on the stats that come out.
The sellers have closed off the growth from 1.1016 to 1.1712 by 62%. This indicates that the balance is tipped in favor of the eurobulls. If the buyers manage to keep the rate below 1.14 on the weekly, a reverse candle pinbar will form. Have a look at the weekly and the last candle there.
In the current climate, the buyers could still bring the euro back to 1.1450. The wave analysts will be considering a five-waver forming from 1.0847. As far as I’m aware, when 4 waves recoil by 38%, the fifth wave has a high chance of updating the maximum and is usually equal in amplitude to the first wave. A 62% rebound means considering that wave 5 won’t quite form. This means that the price could approach 1.16 and sharply U-turn downwards. How then will we know whether there will be growth to 1.16? I think that the critical resistance level is at 1.1405. Breaking through it will open the road to 1.1560 and then we’re on. Now to the Weekly.
A weekly pinbar is forming. After this, traders will again be looking at a fall in the euro to around 1.1050. After yesterday’s fall of the euro, the 1.1773 target is no longer valid.