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Euro Readying for Fall to 1.0860


Yesterday’s Trading:

The key event of Thursday was the release of the US’ Q2 GDP report. The data came out a little worse than expected, but significantly better than the previous value. The GDP in the country had grown by 2.3% and Q1 growth was reassessed from -0.2% to 0.6%.

A new method of calculation was applied when coming to these values and, as a result, previous values were reassessed. It turned out that between 2011 and 2014, the US GDP growth was overstated by 0.3% and on average stood at 2%. The average for growth in 2014 was 1.5% against the earlier value of 1.9%.

The number of applications for unemployment benefit applications was 267,000 against an expected 270,000.

The EURUSD dropped to the D3 and the 157th degree from where it rebounded to the 45th degree.

Main news of the day:

  • At 9:00 EET, Germany is publishing June retail sales (0.5%);
  • At 12:00 EET, the Eurozone is publishing its July CPI (0.2% MOM and 0.8% YOY);
  • At 15:30 EET, Canada will release May GDP values (0.1%);
  • At 16:45 EET, the USA will release its Chicago July business activeness index (50.5);
  • At 17:00 the Reuters/Michigan July consumer confidence index will be out (94.0).

Market Expectations:

The expectation that the Fed would announce a rate hike for September is still there and is still lending support to the dollar. There’s not much data out this Friday. However, the data that is out could shake up market volatility.

Technical Analysis:

  • Intraday target: maximum: 1.0950 (at Europe opening), minimum: 1.0860 (at American session, close 1.0880);
  • Intraday volatility for last 10 weeks: 134 points (4 figures).

The hourly indicators which I’m using are set. The euro slid to 45 degrees. The MA line is heading downwards. All the conditions are in place for a continued fall to 1.0860. If the euro/dollar closes below 1.0945, the weekly will see the forming of a pinbar (a signal for the euro dropping further).


GBP/USD Hourly Graph


The euro/dollar has broken from the daily LB and is currently approaching the dotted line set at close price. So what is it doing here? A close below the line will open up a road to 1.0770 for the euro. A snap through it won’t be considered as a real break. A bear phase has been developing since June, so it’s easier for the sellers to control the buyers. Only a close above 1.1130 will change the market powers that be. Now to the Weekly.


GBP/USD Daily Graph


The trend line still hasn’t been touched. The sellers have won back their losses and are in the positive with regards to the closing price of last Friday. If the euro/dollar closes below 1.0945 than a pinbar will form. I’ve marked this out on the graph. In this case it’s worth waiting for a fall to 1.0770 (see daily graph).


GBP/USD Weekly Graph

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