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EURUSD: correction to continue to the LB line

Previous:

On Tuesday the 15th of August, trading on the euro/dollar pair closed in the red. In the US session, the euro fell against the dollar to 1.1687. Strong retail sales data coupled with an abating of tensions surrounding North Korea provided support for the greenback. Previous negative retail sales figures were revised upwards to positive values. US 10Y bond yields jumped to 2.284%.

The dollar, however, was unable to hold onto the ground it gained from the news. Market participants started profit-taking, resulting in a ricochet upwards of 56 pips to 1.1743.

US statistics:

  • Retail sales index: 0.6% MoM (forecast: 0.4% MoM, previous reading revised from -0.2% to 0.3%).
  • Retail sales index ex autos: 0.5% MoM (forecast: 0.4% MoM, previous rading revised from -0.1% to 0.3%).

Day’s news (GMT 3):

  • 11:30 UK: average earnings (Jun), ILO unemployment rate (Jun), claimant count rate (Jul).
  • 12:00 Eurozone: GDP (Q2).
  • 15:30 Canada: foreign portfolio investment in Canadian securities (Jun).
  • 15:30 USA: building permits (Jul), housing starts (Jul).
  • 17:30 USA: EIA crude oil stocks change (11 Aug).
  • 21:00 USA: FOMC minutes.

EURUSD rate on the hourly. Source: TradingView

The euro fell from the 90th to the 135th degree on yesterday’s news. From there, the price rebounded by 45 degrees. In Asia, a breakout of the trend line was confirmed. Buyers shifted the maximum to 1.1716. The tail of the daily candlestick and the breakout of the trend line give me grounds for predicting the euro to rise against the dollar today.

The 22nd degree is at 1.1720. I think it’ll move to 1.1716. From 22 degrees, I’m expecting to see the price return to 1.1767. If, when trading in Europe gets underway, the price starts going up, and not down, we’ll have a different situation. In such a case, the target will be higher.

Some important statistics for the Eurozone, UK and US are coming out today. We’re also expecting the publication of the minutes from the FOMC’s latest meeting. The Eurozone’s GDP for the second quarter and the FOMC minutes will be the major drivers for the euro/dollar pair today.

The revised GDP figure for the Eurozone will most likely remain at its previous levels of 0.6% QoQ and 2.1% YoY, so the report could be ignored. We should only see a reaction if different figures comes out. More interesting is the publication of the FOMC’s minutes, which could set the tone for trading on the dollar over the next week.


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