On Tuesday the 14th of November, trading on the euro/dollar pair closed up at around 1.18, with an intraday range of 140 pips. The euro rose thanks to positive data from Germany and the Eurozone, growth on the euro crosses, and a decline in US 10Y bond yields. The dollar showed some mixed dynamics against the majors as there were a lot of important news releases.
It was surprising that volatility didn’t rise when the heads of central banks were giving their speeches at the conference in Frankfurt. They had a lot to say. However, given that the market didn’t react to their speeches, it’s as if no one said anything.
Day’s news (GMT 3):
- 10:00 Australia: RBA assistant governor Luci Ellis’ speech.
- 10:45 France: CPI (Oct).
- 11:00 USA: Fed’s Evans speech.
- 12:30 UK: claimant count change (Oct), ILO unemployment rate (Sep), average earnings (Sep).
- 13:00 Eurozone: trade balance (Sep), ECB’s Praet speech.
- 13:00 UK: MPC member Haldane’s speech.
- 16:00 UK: MPC member Broadbent’s speech.
- 16:30 USA: CPI (Oct), NY Empire State manufacturing index (Nov), retail sales (Oct).
- 18:30 USA: EIA crude oil stocks change (10 Nov).
Fig 1. EURUSD rate on the hourly. Source: TradingView
After the 39-hour flat, buyers broke up the upper boundary of the A-A channel. I’m convinced that as the price crossed 1.1690, protective stop levels kicked in on traders’ short positions, which gave the price an additional bullish impulse.
The euro rate continued upwards from the LB balance line with the help of the euro crosses. From a technical point of view, there’s no confusion surrounding the euro/dollar pair. The price broke through the resistance and continued upwards, while European data attracted more buyers for the euro. It’s good that I noticed that the head and shoulders model had failed when I did.
The euro’s rise was halted by the U3 MA line (SMA with a period of 55 and a 1% diversion). This is a strong resistance. If buyers can’t keep up their momentum, the price will correct to the LB balance line, which currently runs through 1.1708.
My forecast is formed of two parts. In the first half of the day, I’m expecting the 225th degree or 1.1825 level to be tested. Buyers won’t give up without a fight, so I think there will be at least one more attempt to go upwards. From there, I’m expecting a correction to 1.1768. This is just me thinking out loud at the moment as what I really want to know is what kind of trading volume we’ll see as the price approaches 1.1825. I’ll post the second half of my forecast later in the day, during the European session.
There’s one more very important aspect to consider. This is on the 8-hour timeframe of the euro index at the upper boundary of the sideways channel, which has formed over the last 56 days. Now we need to wait and see whether or not there will be a rebound from this boundary. Technical analysis of the euro index is important for the crosses. If the crosses start to undergo a correction, the euro will come under pressure against the dollar.