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EURUSD: euro remains under pressure

Previous:

On Friday the 15th of June, trading on the euro closed slightly up. After reaching a new low of 1.1543, prices recovered to 1.1627. The euro corrected on the back of technical factors, which came into play after the publication of mixed US data. The New York and Michigan indices exceeded expectations. Meanwhile, the industrial production index posted a decline.

The US and China haven’t managed to reach an agreement on tariffs. US President Donald Trump announced his decision to impose tariffs on up 50bn USD of Chinese goods. This caused a dip in US10Y bond yields. China intends to respond by imposing its own sanctions on the same value of US products.

US data:

  • Michigan consumer sentiment index: 99.3 (forecast: 98.3, previous: 98.1).
  • Industrial production: -0.1% (forecast: 0.2%, previous reading revised from 0.7% to 0.9%).
  • NY Empire State manufacturing index: 25 (forecast: 19.1, previous: 20.1).

Day’s news (GMT 3):

  • 13:00 Germany: German Buba monthly report.
  • 17:00 USA: NAHB housing market index (Jun).
  • 20:00 USA: FOMC member Bostic speech.
  • 20:30 Eurozone: ECB president Draghi’s speech.
  • 22:45 USA: FOMC member Williams speech.

Fig 1. EURUSD hourly chart. Source: TradingView

Current situation:

  • The euro hit a new low in Friday’s European session, but didn’t continue downwards in a sawtooth model. The correction from 1.1543 amounted to 67 degrees. The rate returned to the MA channel. At the time of writing, the euro is trading at 1.1594. Under the current pricing model, there remains a risk of dropping below 1.1543.
  • In Asia, the US dollar showed mixed dynamics. As trading opened in Europe, a lot of the majors have moved into positive territory. The euro is currently trading down due to the dynamics of the euro crosses.
  • Considering that the hourly stochastic indicator has returned to the sell zone, my forecast has the euro dropping from 1.1612 to 1.1546 (67 degrees).
  • Europe’s economic calendar is virtually empty today. A speech from ECB President Mario Draghi is planned for this evening. His speeches at press conferences following ECB meetings tend to have a profound influence in the euro. He’s unlikely to affect the euro today, unless he says that his words on the 14th of June were misinterpreted. In order for us to see a correction across the market, we need to revisit the low of 1.1543.

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