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Euro/Dollar Readying for Return to 1.0877

EURUSD 1H

Yesterday’s Trading:

Yesterday the GBP fell throughout the market and forced the euro bulls to drop to 1.0819. The UK industrial manufacturing index fell to a three year low. Other key currencies followed the pound downwards. After trading closed in Europe, the euro/dollar returned to the LB at 1.0877.

When Chinese balance of trade data came out in the morning and the stock indices switched into the green, the euro/dollar renewed its minimum at 1.0810.

Main news of the day (EET):

  • 12:00, Eurozone industrial manufacturing data for November;
  • 17:00, US level of labour market vacancies and work force turnover for November;
  • 17:30, US Ministry for Energy’s oil reserve report;
  • 21:00, Fed Beige Book.

Market Expectations:

All I see for the end of today is a flat. In the first half of the day I expect to see the rate return to 1.0877 and then a sideways until Thursday. There is no important news planned for the euro. The oil reserve report could be a driver for the Canadian and this could put pressure on other currencies.

Technical Analysis:

  • Intraday target maximum: 1.0877 (current Asian), minimum: 1.0810 (current Asian), close: 1.0845;
  • Intraday volatility for last 10 weeks: 100 points (4 figures).

The euro stood at 1.0828 at 6:46 EET. Bull divergence has formed on the AO indicator. The stochastic has flipped downside up. The 1.0800 level is a decent support and the euro/pound cross could lend a hand too. Since the calendar is empty, my review is just for the European session.

EUR/USD Hourly Graph

EURGBP 1H

Weak industrial manufacturing data from the UK has changed the trajectory for the cross. The euro/pound has lifted to 0.7547. Since the Chinese indices are trading up today, the euro/pound has corrected to 0.7469. I’ve come up with two separate scenarios for Wednesday. The first is for a growth with the possible formation of a triangle. Since the growth of the stock indices and the strengthening of the yuan is weak, a fall could resume at any moment. The second scenario is for the formation of a double top.

 EUR/GBP Hourly Graph

Daily

The euro/dollar has dropped to 1.0810 but didn’t close below 1.0802. There are risks we could head back to 1.0877 from the daily LB.

 EUR/USD Daily Graph

Weekly

The bears have returned the rate to 1.0810, but the intraday pattern for the past two days has a bullish twang to it. The situation remains unclear on the weekly.

EUR/USD Weekly Graph


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