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EUR/USD: growth may continue in first half of day

Previous:

On Friday, trading on the euro ended in the green zone. The rate closed at 1.0690 against an opening value of 1.0682. In the American session, the dollar came under pressure after the publication of a US macroeconomic data block.

Preliminary figures for US GDP change in Q4 show 1.9% QoQ growth after a forecast of 2.2%. Figures for the previous quarter showed growth of 3.5%. The number of durable goods orders turned out lower than expected.

This news pushed the euro in a northerly direction. Before the weekend, the rate returned from a high of 1.0725 to 1.0679. After an unsuccessful attempt at a rally on the back of this news, short-term speculators closed their long positions.

Market expectations:                                 

Trade on the euro has opened up. Asian traders have reacted negatively to the toughening of migration laws in the US and the resulting protests across America and other countries. On Friday the 27th of January, US president Donald Trump signed an order "Protecting the Nation from Foreign Terrorist Entry into the United States", as it's officially titled.

At the time of writing the euro is trading at 1.0731 against a session high of 1.0740.

Traders' attention is focused on the FOMC meeting and the publication of December's labour market survey. According to forecasts, a rate hike is not expected from the Federal Reserve.

I'm allowing for a growth in quotes up to the resistance zone of around 1.0750/55 in the first half of the day. From there I expect the rate to return to around the 1.0725 mark.

Day's news (GMT 3):

  • 10:45 Australia: RBA assistant governor Debelle, to speak;
  • 11:00 Switzerland: KOF leading indicator (Jan); Spain: Preliminary GDP data (Q4);
  • 13:00 Eurozone: Economic Sentiment Indicator (Jan); Busniess Climate (Jan); Consumer Confidence (Jan);
  • 16:00 Germany: Consumer Price Index (Jan);
  • 16:30 USA: Personal Consumption Expenditures, price index (Jan); Personal Spending and Personal Income (Jan);
  • 18:00 USA: Pending Home Sales (Dec);
  • 18:30 USA: Dallas Fed Manufacturing Business Index (Jan)

EURUSD rate on the hourly. Source: TradingView

Intraday forecast: low: 1.0708 (current rate in Asia), high: 1.0752, close: 1.0726.

The euro’s strengthening stopped at the 67th degree. The lines running across the peaks of 1.0775, 1.0770 and 1.0766 also run through 1.0750 on the European session. The 90th degree runs through 1.0761 (false break of this level probable). Given that today is Monday, and traders are ignoring macro-statistics, the euro may not reach the resistance zone of 1.0750-1.0755.

According to the forecast I'm expecting quotes to increase up to 1.0750, with a subsequent slide to around 1.0725. In the wake of an upgrade of the maximum from the CCI indicator and the Stochastic Oscillator, some bearish divergences are forming. Don't be in a hurry to sell your euros, though, because a growth in price leads to a bigger share for sellers. Allow for the price to find its resistance.


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