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EURUSD: correctional movement following same path as on the 15th of June

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The EURUSD pair closed up at the end of Wednesday’s trading. The price has returned below the trend line, which was broken through on the 20th of June. This was brought about by the impact of Andy Haldane’s speech, chief economist at the Bank of England, as well as by US bond yields and US data. The pair spent most of the day in a sideways trend, trading within a 30-pip range.

As sterling was given a boost, the Euro against the dollar rose to 1.1156. It came back down to 1.1130 after certain developments in the news. US data, which saw a higher-than-expected level of existing home sales, provided support for the US dollar. After trading closed in Europe, the trend line was broken through against the backdrop of falling US bond yields. The rate rose to 1.1169.

US data:

There were 5.62 million existing home sales in the US in May (forecast: 5.55, previous reading: 5.56).

Day’s news:

  • 11:00 Euro zone: ECB economic bulletin;
  • 13:00 UK: CBI industrial trend survey – orders (Jun);
  • 15:30 Canada: retail sales (Apr);
  • 15:30 USA: initial jobless claims (16 Jun);
  • 16:00 USA: housing price index (Apr);
  • 17:00 Euro zone: consumer confidence (Jun);
  • 17:00 USA: CB leading indicators (May);
  • 21:00 UK: MPC member Forbes’ speech.

EURUSD rate on the hourly. Source: TradingView.

Intraday forecast: low: 1.1132/19, high: 1.1177, close: n/a.

On Wednesday, sellers tried to launch an assault on 1.11 level, but gave up after the close of the European session. The price restored to 1.1172. The rebound from the low point of 1.1119 amounted to 45 degrees.

After the breakout of the trend line, the situation again became conflicted. On the one hand, the upwards movement is reminiscent of the rise in quotes from the low of 1.1132 (15th of June) to 1.1213. I’ve taken an exact copy of the movement seen during the 15th and 16th of June and imposed it on today’s chart, starting at the low of 1.1119. One should expect a slide from here. Oil is down and the Euro has yet to recover from the effects of its collapse.

On the other hand, gold and yen have appreciated, signaling a move towards safe haven assets. The Euro, as a funding currency, could appreciate against the dollar on the back of a drop in stock indices. Cycles also suggest the Euro will strengthen.

In Asia, US 10Y bond yields are trading down, but their current value is within yesterday’s range. There’s nothing more to say about it at this point. We need to wait until they exit this range.

My position is currently to stay out of the market. However, I would really like to see the historical pattern work out here and to see a rebound from the 45th degree. Given the gentle slope of the upwards movement, I’m staying in the bear camp.



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