On Tuesday the 18th of September, trading on the euro closed down. Volatility was high throughout all the trading sessions. In the first half of the day, the euro rose to 1.1710. It then dropped to 1.1652 in the US session on the back of a rise in US10Y bond yields to 3.06%. Demand for the US dollar increased after China announced that it would be bringing in new trade tariffs from the 24th of September on more than 5,200 US goods worth 60bn USD.
Day’s news (GMT 3):
- 11:00 Eurozone: current account (Jul).
- 11:30 UK: CPI (Aug), retail price index (Aug), PPI – output (Aug), PPI – input (Aug).
- 12:00 Eurozone: construction output (Jul).
- 15:30 US: building permits (Aug), housing starts (Aug), current account (Q2).
- 16:00 Eurozone: ECB President Mario Draghi’s speech.
- 17:30 EIA crude oil stocks change (14 Sep).
Fig 1. EURUSD hourly chart.
The euro revisited last week’s high, but buyers failed to break through as the news from China pushed them back to the LB balance line.
Last week’s high was revisited ahead of time. If bulls revisit it again, there’s an increased risk of breaking 1.1725. Demand for the euro could increase on expectations that the Fed may not raise interest rates in December due to the trade war with China.
From a technical standpoint, the pair is ready to decline. I’ve considered various patterns that fit the current situation. Some of them suggest that 1.1652 will be revisited. My question is what will traders react to today?
Today I expect to see the euro recover to 1.1766. It’s worth keeping an eye on British data. The pound could act as a catalyst for some of the major pairs in today’s European session. If the bulls return to 1.1740, I expect a rebound from there. It’s too early for a breakout there.