On Thursday, trading on the EURUSD pair closed down. The Euro fell against the dollar, but it was a reluctant retreat. US 10Y bond yields didn’t manage to consolidate above 2.166% and fell to 2.145%. In the end, the price rebounded from 1.1139 and returned to 1.1155.
Data from the US session:
- The index of leading indicators in the US grew by 0.3% in May (forecast: 0.4%, previous reading: 0.2%).
- The number of work unemployment benefit claimants in the US rose to 241,000 (forecast: 240,000, previous reading: 238,000).
- The retail sales index in Canada grew by 0.8% for the month (forecast: 0.2%, previous reading: 0.5%). The retail sales index ex autos grew by 1.5% (forecast: 0.7%, previous reading: -0.1%).
Day’s news (GMT 3):
- 10:30 Germany: Markit services PMI (Jun), Markit manufacturing PMI (Jun);
- 11:00 Euro zone: Markit services PMI (Jun), Markit manufacturing PMI (Jun);
- 15:30 Canada: CPI (May), CPI core (May);
- 16:45 USA: Markit services PMI (Jun), Markit manufacturing PMI (Jun);
- 17:00 USA: new home sales (May);
- 18:15 USA: Fed’s Bullard speech;
- 19:40 USA: FOMC member Mester speech;
- 20:00 USA: Baker Hughes US oil rig count.
EURUSD rate on the hourly. Source: TradingView.
Intraday forecast: low: n/a, high: n/a, close: n/a.
Since trading opened in Asia, the Euro has restored to 1.1165. The Euro appreciated against the greenback as US 10Y bond yields also grew. I believe that this strengthening was brought about by the bump in oil prices.
I’ve shown two potential scenarios on the chart, both of which are relevant at the time of writing. The main EURGBP cross and 10Y bond yields are both in a sideways trend. Oil is on the rise, which is supporting the commodity currencies. If the EURGBP cross opens up and US bond yields open down, the Euro will move towards 1.12.
I think that it’s better to hold off on making any trading decisions today until the London session opens and the Asian session closes.
I think the scenario in which the Euro slides to the 45th degree at 1.1225 is the most likely outcome. In order for this to happen, we need to see US bond yields and the EURGBP cross grow over the course of the next day. In such a case, the strengthening of commodity currencies on the back of an oil surge won’t be able to stop sellers. Yesterday, they were unable to break out of the lower boundary of the channel. Today, this line runs through 1.1147. The faster this is broken through, the higher the probability of renewing the minimum at 1.1119. If they fail, we can expect a rally for the Euro over the following few days.