The euro/dollar closed slightly up in comparison with Tuesday. The day was volatile due to the news. The daily candle has long shades and a W-shaped intra-day pattern.
The euro/dollar fell to 1.1182 from trade opening in Europe due to a fall in the euro/pound cross. When information came out about how the Germans could offer state support to Deutsche Bank, the euro shot up to 1.1237.
The Fed chief also spoke yesterday, bringing the euro down to 1.1187. Yellen announced before congress that the majority of FOMC members think rates must be lifted before the end of 2016; i.e. the likelihood is high that there will be a rate hike in December this year.
When the OPEC states agreed on a reduction in oil output of by 740k barrels per day to 32.5 million barrels, oil jumped 7% to $49 per barrel. As such, the USD lost value on the Forex market, with the euro restoring to 1.1220.
In my forecast I’ve gone for a rise to 1.1252 in the first half of the day. On the hourly period, the euro has a complex wave structure, so my forecast may not come off. When formed on the basis of a W-shaped pattern, the right side tries to be similar to the left. This is the ideal situation. The maximum on the left side is at 1.1279. But the market could start forming a down-sized triangle. Then with every renewal of the maximum the risks of a sharp fall to 1.1190 will be up.
Day’s News (GMT 3):
- 10:55, German employment changes for August;
- 11:00, UK net borrowing in August;
- 11:30, UK M4 money supply and number of mortgage approvals in August;
- 15:30, US definitive GDP in Q2 of 2016, unemployment benefit applications for the week ending 24th September;
- 16:00, BoE’s Forbes to speak;
- 17:00, US incomplete housing sales in August, FOMC’s Powell to speak;
- 23:00, Fed chief Yellen to speak.
Intraday forecast: minimum: 1.1214 (current Asian), maximum: 1.1252, close: 1.1230.
Euro/dollar rate on the hourly. Source: TradingView
The euro has found a support at 1.1180/90. As I said above, the high volatility on the currency market is due to the fundamental factors. These are always more weighty than the technical signals. Keep this in mind and take it into account when opening trades.
Due to a rise in the price of oil to $49, the euro/dollar rose to 1.1236. The stochastic is in the sell zone. However, I reckon that the buyers will renew the maximum from trade opening on the European session.
I’ve made a line across the 1.1226 and 1.1237 peaks. On the European session the line runs through 1.1252. This is where the target is for Thursday. From here I’m waiting for a bounce to 1.1233. Basically we’re talking about a close at the LB. If the price goes according to my forecast, Friday for me will be a day of growth for the euro: all the way to 1.1280.