On Thursday the 12th of April, trading on the EURUSD pair closed down. As US president Trump dialed down his rhetoric on Syria, the US dollar got a boost along with US stocks and bond yields. Trump also mentioned that trade talks between Washington and Beijing are going well, which provided additional support to the dollar.
US10Y bond yields jumped from 2.773% to 2.840%. During the US session, the euro dropped to 1.2300.
According to the minutes of the ECB’s latest meeting on monetary policy, the regulator has expressed concerns over the euro’s strength as well as over the prospect of a trade war with the US.
Day’s news (GMT 3):
- 12:00 Eurozone: trade balance (Feb).
- 15:00 USA: Fed’s Rosengren speech.
- 16:00 USA: Fed’s Bullard speech.
- 17:00 USA: Michigan consumer sentiment index (Apr), JOLTS job openings (Feb).
- 20:00 USA: Baker Hughes US oil rig count, FOMC member Kaplan’s speech.
Fig 1. EURUSD hourly chart. Source: TradingView
The euro dropped to the 67th degree yesterday just as I expected. The decline came to an end at 1.2300. Here, buyers got some support from the local minimum from the 10th of April. The rate missed the 90th degree and rebounded to 1.2340, from which point a new correctional phase began. The pair has been in this phase for the last 12 hours.
Because of the rebound, the situation has become slightly ambiguous, but if the bears come out to play either now or at the beginning of the European session, the euro should test the 1.2285 mark against the dollar before trading in Europe closes.
In Asia, the dollar has mixed dynamics against the majors. It’s up against the safe havens (JPY and CHF), which means that investors aren’t particularly worried about Syria for now. The economic calendar is pretty empty for Europe. Barring any developments in the US, market participants will adhere to technical signals in today’s trading. The case for a drop will disappear if the hourly candlestick closes above 1.2352.
I’ve proposed an alternative scenario on the chart as well, which will play out if the bulls try to disrupt the downwards trend and break through the trend line at 1.2345.