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EUR/USD: expected correction after a fall

Previous:

When Trump was ahead in the race for presidency, traders were selling USD. On the scare-stories about Trump, the euro/dollar rose to 1.1299. When it became clear that he was to win, they started to buy back the cheapening dollar. The dollar fully won back its losses and headed positive. By the end of the day the euro had lost 3.47% and was at 1.0907 (-392 points).

The uncertainty surrounding the new president was gone. Hilary Clinton accepted Trump’s victory and does not intend to contest the outcome. The US stock markets calmly reacted to Trump’s win. The key stock indices closed up.

Many investors are in disarray after the US elections. This is why I try to stay off the market during important events.

Market expectations:

The euro/dollar dropped to 1.0907. If we take a look at the daily graph, we can clearly see that the sellers have targeted 1.0851 (25th October minimum). As for today: after yesterday’s euro whitewash, I expect a correction to 1.0990. Before the correction starts, we’ll probably see a rest of 1.0896. The minimum should be updated in any case. The economic calendar in Europe is empty, so there’s nothing that should interfere with a rebound.

Day’s News (GMT 3):

  • 16:30, Canadian September primary market housing price index and US initial unemployment benefit applications for the week ending 5th November;
  • 17:15, FOMC’s Bullard to speak;
  • 17:50, ECB’s Constancio to speak;
  • 22:00, US October federal budget balance.

Technical Analysis:

Intraday forecast: minimum: 1.0896, maximum: 1.0990, close: 1.0962.

Euro/dollar rate on the hourly. Source: TradingView

The euro/dollar fell from a 1.1299 maximum by 315 degrees. From being off the charts in the bull zone (above the U3), the price plummeted the other way, falling off the charts below the D3. I didn’t make a euro/dollar forecast yesterday since I didn’t know how market participants would react to the US election result. I can say one thing though: I didn’t expect to see such movement and such an intraday price pattern.

On Thursday I expect the euro to correct to the 67th degree. I reckon that the correction will start from 1.0896. The calendar in Europe is empty, so we may well see a return to the balance line at 1.0990/1.10



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