On Monday, the 3rd of July, the euro/dollar rate closed down. The US dollar rose against the single currency on the back of a technical correction, the closing of short positions on the dollar and low trading activity ahead of today’s national holiday in the US.
The dollar received additional support from some optimistic manufacturing PMI data. In June, the PMI for the manufacturing sector grew to 57.8, exceeding expectations of 55.0 and reaching its highest level since August 2014.
Day’s news (GMT 3):
- USA: Independence Day;
- 11:30 UK: PMI construction (Jun);
- 12:00 Eurozone: PPI (May);
- 15:30 EU: ECB board member Praet’s speech;
- 16:30 Canada: Markit manufacturing PMI (Jun);
- 20:40 EU: ECB board member Yves Mersch’s speech.
EURUSD rate on the hourly. Source: TradingView.
Canada had a national holiday yesterday, while the US had a half day. US markets closed 3 hours early. On the 4th of July, Americans celebrate Independence Day. With a low trading volume expected, it’s possible that we’ll see some sharp price fluctuations in both directions in the hunt for stop levels.
Sellers have regained 76 pips of ground in the last 2 days. It’s not much, but I can assure you that the road is now open towards the support zone at 1.1330/38. A breakout here would trigger a mass closing of long positions and we would start to see the formation of a head and shoulders model with a target of 1.1152 (take a look at the daily chart).
At the time of writing this review, the euro is trading at 1.1369. The pair has been in a correctional phase for the last 13 hours. The market’s behavior is reminiscent of the correction from the 1.1392 low. I’m forecasting a fall for the euro to 1.1338 to complete its downward pivot. I’m not ruling out that this could turn into a complex structure with a target below 1.12. The market is thin, so keep an eye on the price’s behavior around 1.1332. With the euro/pound cross, keep an eye on 0.8720 – 0.8730.