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EUR/USD: Monday against Friday

Previous:

On Friday, trading on the dollar closed down. The euro fell against the dollar as traders closed their long positions in anticipation of the long weekend. Euro-bulls didn't even react to the fall in US bond yields. By the end of the day, 10-year bonds had fallen by 1.22%, to 2.420%. By the end of the session, the euro had fallen to 1.0604.

Market expectations:

The US has a national holiday today, so the debt market is closed. This means that following US bond yields today isn't an option. Given that today is Monday, and that the euro closed down on Friday, my prediction for the day is that the euro will grow - Monday against Friday. I'm not paying attention to the news today.

Day's news (GMT 3):

  • 10:00 Germany: Producer Price Index (Jan);
  • 14:00 Germany: German Buba monthly report, UK: CBI Industrial Trends Survey - orders (Feb);
  • 16:30 Canada: wholesale sales (Dec);
  • 18:00 Eurozone: consumer confidence (Feb);
  • USA: President's Day;
  • Eurozone: ECOFIN meeting.

EURUSD rate on the hourly. Source: TradingView

Intraday forecast: low: 1.0603 (current in Asia), high: 1.0655, close: 1.0635.

The 1.0640 - 1.0650 zone could not hold. As traders closed their long positions, the euro fell to the 67th degree. This degree is significant for the euro. Considering that today is Monday, my forecast is looking up the chart for movement against Friday's. The target around the 45th degree is 1.0655. The rate might make it as far as 1.0666, but this remains to be seen due to today's national holiday in the US.

Positives for the euro ( ):

Fundamental:

( ) US president Donald Trump favours a weaker dollar;

( ) CME Group FedWatch Tool has downgraded the probability of a rate hike in March from 31% to 17.7%;

Technical (short-term):

( ) On the hourly timeframe, the euro rate has corrected to the 67th degree;

( ) On Friday, US 10-year bond yields fell by 1.22%;

( ) The daily Stochastic indicator is in the buy zone and trying to create a bullish signal.

Negatives for the euro (-):

Fundamental:

(-) The ECB isn't planning to curtail their QE program. According to the minutes of the ECB's meeting, most members of the Governing Council don't consider it essential to reduce the current stimulus (long-term impact);

(-) The probability of a rate hike in June by the US Fed has increased (relevant for March);

(-) Political risks in Europe (French elections and Brexit);

(-) Greece can't reach a deal for financial assistance with its creditors;

(-) The recent release of statistics favours the US.

Technical factors (short-term):

(-) Net short positions from speculators big and small have increased on the Chicago exchange. For large speculators, it has grown at the expense of long positions by 2079 contracts. For small speculators, the number of short positions has increased by 6632 contracts.



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