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EURUSD: correction on the euro following the pound

Previous:

On Tuesday the 13th of November, trading on the EURUSD pair closed down. The euro rose against the dollar on the back of the pound’s recovery in the wake of further developments on Brexit. This led to a recovery for other majors, while exerting pressure on the greenback from all sides.

Irish news outlet RTE reported that an agreement has been reached on the Irish border. There are rumours circulating that the British government will sign a Brexit deal today. The euro jumped to 1.1294, rising further to 1.1321 in Asia.

Day’s news (GMT 3):

  • 12:30 UK: CPI (Oct), retail price index (Oct), PPI - input (Oct), PPI – output (Oct).
  • 13:00 Eurozone: GDP (Q3), industrial production (Sep).
  • 16:30 US: CPI (Oct).

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Fig 1. EURUSD hourly chart.

Current situation:

My predictions were blown out of the water by yesterday’s news. The bears encountered resistance at 1.1241. On the back of the rising pound, the bulls had no trouble returning to the balance line. This growth was to be expected as a correction was overdue. I was expecting it to happen after making new lows, in which case we could have expected a recovery to 1.1365.

Today we should find out whether or not the Italian government will send the European Commission a new budget. In my forecast, I’m expecting a drop to the balance line or the 45th degree. Since the market is currently at the mercy of geopolitics, I don’t have any predictions for the US session. If Italy doesn’t put forward a new plan, they could have sanctions imposed on them. Or, they could just add some slight revisions to their current plan. If the pair drops to the 45th degree in line with my prediction, I shall expect a further drop to the 67th degree at 1.1241. Sellers aren’t going to simply allow the pair to rise.


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