The euro/dollar renewed its maximum of 1.0804 to 1.0887. The euro’s strengthening was facilitated by two factors: a fall in American stock indices and in oil prices after the US Ministry for Energy published its oil reserve report.
The DIJA closed down by 364.81 points (-2.21%) to 16,151.41 by yesterday’s close. The S&P 500 closed down by 48.40 points (-2.50%) at 1,890.28. The Nasdaq Composite closed down by 159.9 points (-3.41%) at 4,526.1.
US oil reserves in the week ending 8th January were up by 0.2 million barrels to 482.6 million barrels. The rise is only slight, but oil extraction and petrol reserves were also up.
Main news of the day (EET):
- 14:00, BoE interest rate decision, minutes and asset purchasing program volume;
- 14:30, ECB minutes from last meeting;
- 15:30, Canadian new-build housing price index for November;
- 15:30, US import price index for December, initial unemployment benefit applications, FOMC member Bullard to speak;
- 16:00, Draghi and Coeure to speak.
Thursday’s events of the day are the BoE meeting and ECB minutes. I made a forecast, but it’s hard to tell what the reaction of the crosses will be to the news.
The euro/dollar was trading around 1.0895 at 6:39 EET. The day closed with a pinbar, so prepare yourselves for a renewal of the 1.0969 maximum in the coming days. In my forecast I’ve gone for a rebound to the LB and then a strengthening of the euro to 1.0915. If the euro will strengthen straight up, we should expect to hit 1.0969 today. The Chinese indices are in the negative and the yuan is down.
- Intraday target maximum: 1.0911, minimum: 1.0855, close: 1.0895;
- Intraday volatility for last 10 weeks: 100 points (4 figures).
The eurobulls have been defending the 1.0800 level. The pair has bounced 90 points from it and there are ongoing attempts in Asia to test the solidity of 1.0900. In my forecast I’ve gone for a rebound to the LB and then a growth. The euro could head straight up since the Chinese indices are in the red zone. The European indices could fall from trade opening in a show of solidarity with the Chinese. The euro/dollar will shift up sharply, so look to sell the euro only at 1.0969 (U3 and 11th January maximum).
The euro/pound cross on Wednesday headed up and thus gave additional haste to the euro. Since the MA is headed upwards, the cross could easily shift to 0.7605. You can decide for yourself whether my forecast is worth a look; it doesn’t take the BoE meeting or the ECB minutes into account.
After yesterday’s bounce upwards, a pinbar was formed. Its rise was accompanied by risks of a break in the trend line increasing and an increase of the rate above 1.0969. After a rebound to 1.0860, on Thursday we can consider a euro strengthening against the dollar.
We need to wait for the weekly candle to close. The balance is tipped in favour of the buyers on the daily.