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EUR/USD: price recovers by 61.8%

Previous:

By the end of Wednesday the euro/dollar closed up. The rate recovered from session minimums of 1.0433 to 1.0463 due to sales of the USD. The market is a thin one (low liquidity), so the euro bulls couldn’t hold when the strong consumer confidence data came in and there was a growth in US bonds. It looks like traders are closing their short positions before the New Year.

The US consumer confidence index for December was 113.7 (forecasted: 108.5, previous: reassessed from 107.1 to 109.4).

Market expectations:

The euro rose to 1.0475 in Asia. The pair has been in the 1.0429-1.0500 price range from 22nd December. The market is one of low liquidity, so anything could happen on it. I don’t see the euro growing on it at the moment though. Taking the 61.8% correction from a fall from 1.0500 to 1.0427 into account, I want to start considering the formation of an inverted intraday pattern.

Day’s News (GMT 3):

  • 10:00, Swiss consumer expenditure indicator for November from UBS;
  • 12:30, UK mortgage approvals in November from BBA;
  • 18:00, US incomplete housing sales in November.

Technical Analysis:

Euro/ rate on the hourly. Source: TradingView dollar

Intraday forecast: minimum: 1.0454, maximum1.0483, close: 1.0466.

On Tuesday demand for the euro in the crosses shuffled the pack. The euro rose to 1.0463, and to 1.0475 in Asia. As I said above, the price corrected to 61.8% from a fall in the price from 1.0500 to 1.0427.

For the moment we can have hopes for the buyers covering the shade of the daily candle from 22nd December. After pinbars, the hammers and the falling stars, the price often bounces by 61.8-76.4%, so I’m going with a return to 1.0429 over the course of two days. For this a price pattern like I have on the graph needs to form.

If the euro’s weakening against the dollar and pound starts from trade opening in Europe then it will be even better for us. The trend line which takes its beginnings from 20th December’s 1.0352 minimum is under threat. A break in the trend could see the euro heading to 1.0435 by trade close in Europe.

Again I just want to remind you, due to the thin market anything can happen. Speculators and trading robots are poised to move at the faintest whiff of anything. The more robots generating a sell signal, the stronger the fall for the euro/dollar, and vice versa. The longer the price sits at its current level, the higher the likelihood of the euro strengthening.


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