On Wednesday the 21st of November, trading on the euro closed slightly up. The stock indices and oil prices correction supported the euro during the day. Market participants even ignored the European Commission's decision to turn down Italy's latest budget plan. This decision increased the likelihood of sanctions being imposed on the country. Due to the fact that this process could take several months, the market didn't react very much to this news.
Day's news (GMT 3):
- 15:30 Eurozone: ECB monetary policy meeting accounts.
- 17:45 Canada: BoC Wilkins speech.
- 18:00 Eurozone: consumer confidence (Nov).
- 20:00 Eurozone: ECB's Mersch speech.
- 23:55 UK: MPC member Saunders speech.
Fig 1. EURUSD hourly chart.
My expectations that the euro would weaken on the European Commission's decision did not materialize. The upward correction was delayed in time. Against the backdrop of the overall weakening of the US dollar and the recovery of prices across stock markets, buyers were able to raise the exchange rate to 1.1415 (high: 1.1425). By the close of trading, the price returned to 1.1332.
The technical picture remains bearish despite the corrective movement to the upward movement from the low of 1.1226. The price is trading near the balance and trend lines. Given that the market has leveled out due to uncertainty around Italy, I still expect the euro to weaken to 1.1340 by the close of the trading week.
Today is likely to be flat due to the Thanksgiving holiday in the US. In this regard, I expect fluctuations within yesterday's range of 1.1365-1.1425. If in the midst of the US dollar's overall strengthening crosses with the euro go down, then it's worth lowering the target level from 1.1340 to 1.1345. Now they are all trading in the plus, so it is unlikely that anyone will sell the euro against them.