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EURUSD: consolidation expected

Previous:

On Monday, trading on the Euro closed down. The pair didn’t manage to break 1.1200 level after Emmanuel Macron’s victory at the French parliamentary elections. The economic calendar was fairly empty, so as the dollar rose across the market, the Euro fell against it from 1.1213 to 1.1141 (-72), including during trading in Asia. US 10Y bond yields rose to 2.20%.

Market expectations:

There are a lot of speeches today. It’s unclear, though, which of them, if any, will increase volatility on the market. A strong support has formed between 1.1130 and 1.1140. In Asia, the price is correcting. Taking yesterday’s slide into account, as well as the disagreement among indicators on different timeframes, for Tuesday, I’m expecting to see some consolidation.

Day’s news (GMT 3):

  • 09:00 Germany: PPI (May);
  • 10:30 UK: BoE governor Carney’s speech;
  • 11:00 Euro zone: current account (Apr);
  • 11:45 Switzerland: SNB chairman Jordan’s speech;
  • 14:45 USA: FOMC member Rosengren’s speech;
  • 15:00 USA: FOMC member Fischer’s speech;
  • 15:30 Canada: wholesale sales (Apr);
  • 15:30 USA: current account (Q1);
  • 17:00 Euro zone: ECB governing member Carré’s speech;
  • 22:00 USA: FOMC member Kaplan’s speech.

EURUSD rate on the hourly. Source: TradingView.

Intraday forecast: low: 1.11421, high: 1.1173, close: 1.1168.

For the prices from the 67th degree and lower, you need to add 5 pips. Given that the hourly Stochastic indicator is in the sell zone, I first want to see the Euro fall to 1.1102. On the 4-hour timeframe, the Stochastic has crossed upwards. As we can see, the technical picture for the Euro is contradictory. In addition, cyclical analysis points to a recovery for the Euro.

So what have I chosen? Growth to 1.1165/67 (22nd degree) -> fall to 1.1141 -> growth to 1.1173 (lb). This is how I currently see things unfolding. This will be better for sellers if the price immediately falls below 1.1132 as trading opens in Europe. Otherwise, bulls may come out to play as the price approaches 1.1173 on the 4-hour timeframe (where the Stochastic is up).

Bears have made a mess of the trend line over the last few days. It’s probably better to watch the market from the sidelines today as the price is as likely to break through the trend line as it is to rebound from it. For the Euro to continue weakening, the price should close today below the lb balance line.



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