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Euro/Dollar: Draghi to Set Euro Movements

Hourly

Yesterday’s Trading:

On Wednesday, the euro/dollar closed down whilst waiting for the ECB meeting and the US’ Friday employment report. Due to the ECB meeting, traders could forecast the US’ stats. US private sector employment creation came out worse than expected, with manufacturing orders down.

The ADP index showed that employment in the US private sector was up in August by 190,000 (forecasted: 200,000). July’s figures were reassessed from 185,000 to 177,000. Manufacturing orders were down in the country from 1.8% to 0.4%.

The euro/dollar was down to the 90th degree from 1.1318. At 7:29 EET it was trading at 1.1216. The euro was unwillingly closing down against the dollar, without sharp impulses.

Main news of the day:

  • Between 10:15 and 11:30 EET, the service sector PMI’s for Spain, France, Germany, the UK and the Eurozone are being released;
  • At 11:00 EET, the Eurozone will inform us about retail sales changes throughout July;
  • At 14:45 EET, the ECB will announce its interest rate decision;
  • At 15:30, an ECB press conference will take place. In Canada and the US, July trade balance figures are being published. The US will release initial unemployment benefit application numbers;
  • At 16:45, Markit’s August service sector business activity index for the US is being published;
  • At 17:00, the August ISM business activity index in the service sector will be in the public eye.

Market Expectations:

Today some data on EU-wide service sector business activity is due to be published, in addition to the ECB convening. There’s not expected to be any surprise with interest rates. Draghi’s speech on the Eurozone economy, monetary policy and the situation in China has caught most market participants’ attention.

Technical Analysis:

  • Intraday target: maximum: n/a, minimum: n/a, close: n/a;
  • Intraday volatility for last 10 weeks: 130 points (4 figures).

The euro/dollar is trading by the D1. The D1 and 90 degrees are the support. I’m inclined to believe the support will be broken and by 14:45 EET, the euro will be down to 112 degrees. The forecast which I’ve made is only for before the ECB convenes. It would be senseless to forecast euro movements for Draghi’s speech. You can also leave the indicators aside. They will work when the ECB chief has finished giving his speech. If we take a look at the close of the daily candle, the road to 1.11 is open.

 
 

GBP/USD Hourly Graph

Daily

The eurobears were able to close Tuesday’s candle yesterday. This bear takeover is a signal to sell the euro. Take note that the price is at the trend. If there were no ECB meeting, one could sell euros on the recoil, but in this situation we have to wait for Draghi to give his speech. He could ensure the euro hitting 1.12, or his words could cause a downward impulse, tearing off all of the stops beneath 1.12. Today I’m expecting a break in the trend line. Now to the next tab.

 
 

GBP/USD Daily Graph

Weekly

The euro is down after a recoil. It’s possible that Draghi will send the euro below 1.1155 today and in which case we’ll see a pinbar forming. In this case, the road to 1.0950/30 will be open.

 
 

GBP/USD Weekly Graph


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