On Monday the 24th of September, the euro closed at the level of Friday, leaving a long shadow on the daily candlestick. The British pound coupled with the statements by ECB head Mario Draghi acted as catalysts, thus strengthening the euro against the dollar.
The euro rose to 1.1851. Buyers retreated to 1.1744 against the backdrop of an increase in US 10-year yields. The currency dropped to 1.1731 during the Asian session.
Mario Draghi said that he expects an increase in inflation and the continued growth of salaries in the Eurozone.
Day's news (GMT 3):
- 16:00 US: HPI (MoM) (Jul).
- 17:00 US: Richmond Fed manufacturing index (Sep), CB consumer confidence (Sep).
- 23:30 US: API weekly crude oil stock (Sep 21).
Fig 1. EURUSD hourly chart.
Sellers completely blocked yesterday's growth. A reversal pattern was formed, but so far without confirmation. To make it work, sellers need to consolidate below 1.1715. According to forecast, I expect a fall to the trend line (1.1715) with a subsequent rebound at 1.1750 as a breather, and an acceleration for the trend line pattern. Given the formations on 4H and the daily chart, I expect the euro to fall to 1.1685.
Traders' attention has shifted to the Fed meeting, the results of which will be announced on Wednesday. The rate is expected to increase by 0.25%. The reaction will be on the comments on the December rate hike. The euro will rise if there are any hints that the Fed will take a pause or the dollar will collapse. I believe that we could go to 1.1680 by the time of the announcement.
Warning: while the price is above the trend line (1.1715), buyers can return it to 1.1783. Keep this in mind before opening short positions. Although now selling the euro is risky. There's a poor profit-to-risk ratio.