Alpari - Analytics

Alpari

748.25 6.25/10
72% of positive reviews
Real

Euro/dollar correcting after yesterday’s rally

At the beginning of the European session, MPC member Ben Broadbent, after hitting the pound yesterday, dealt another blow in an apparent attempt to keep it down a while longer and support British exports. In an interview with Press and Journal, he said that he wasn’t currently inclined to vote in favour of a rate hike. The pound/dollar reacted to this with a 35-pip slide. A session low of 1.2812 was recorded, but the pound recovered against the dollar after UK unemployment data was released, pushing it up by 58 pips to 1.2870.

The euro/dollar rate fell to 1.1442 (-48 pips) on the back of correctional movements on the euro/pound (-52 pips) caused by UK statistics. The rebound on our main pair amounted to 45% of the upwards movement from 1.1383 to 1.1490. If the hour closes below 1.1436, this level will become broken for buyers. A fall below 50% could lead to a closing of long positions before Janet Yellen’s testimony.

Were it not for Donald Trump Jr.’s Twitter post and Ben Broadbent’s interview, the euro/dollar would already be trading below 1.1380. Now, we await some food for thought from Janet Yellen. The market has factored in 3 rate hikes for the year. Any hint of another this year would cause the dollar to slide across the market. If her statements are more or less neutral, the euro/dollar rate will continue its correctional movement towards 1.1425.



To leave a comment you must be or register