The euro/dollar on Wednesday restored from 1.1370 to 1.1446. Over the course of the day, the euro bulls found support from the euro/pound cross rate. The pound weakened against the euro after UK industrial production and manufacturing data came out.
The dollar was down during the American session after the US ministry of energy released its oil report for the week ending 6th May. Reserves had fallen by 3.4 million barrels to 540 million. A rise of 0.5 million had been expected. Oil extraction was also down from 8.825 to 8.802 million barrels.
On this news oil shot up 5.5% to $47.7 and with it the euro. There weren’t any fundamental reasons for a strengthening of the euro. Although, the technical signal did work out: a break from the trend line.
The euro/dollar has bounced from the trend line on the daily. Whilst the price is under 1.1494 I will wait for the weekly signal to be realised on the pinbar. Today I’ve not bothered with a forecast. I think that Thursday will be a symbolic day for the euro. At 14:00 EET the BoE is announcing its interest rate decision. The euro/pound cross was up on Wednesday, so today it could fall. It’s not known what Mark Carney will say. If demand for euro ends up down, on Friday we will again be looking at a weakening of the euro against the dollar to 1.13.
Day’s News (EET):
12:00, Eurozone March industrial production data;
14:00, UK reports: BoE inflation, interest rate decision and how the votes went, plus asset purchasing program;
14:45, BoE’s Mark Carney to speak;
15:30, Canadian March new housing price index. US labour market data and import prices;
18:45, FOMC member Rosengren to speak;
20:30, FOMC member George to speak.
Yesterday’s forecast came off inversed. The euro/dollar rose to the upper limit of the channel which was set at three values: 1.1385-1.1358-1.1479. At 07:18 EET the pair was trading around 1.1424. On the weekly and daily time frames, the situation hasn’t really changed from yesterday. Gold and AUD/USD are falling. The euro is running out of steam in the EUR/AUD and EUR/JPY crosses at the moment. If the pound weakens after Carney has spoken, the euro/dollar will return to 1.1385. If not, the euro bulls will start to prepare to pass 1.1480.