Friday’s trading closed nearly 100 pips down. Growth from the 1.1440 support stopped at the 1.1474 mark. While the subsequent drop seemed like a technical correction up until 1.1420, the breakout of the trend line at 1.1412 sped up the decline on the back of stop levels being activated and short positions closed.
Buyers cashed in on their long positions thanks to the dollar’s rise, before the greenback reversed ahead of the Christmas holidays. It was also given a boost by a US stock selloff, with the dollar and yen coming into play as safe havens.
The majors showed mixed dynamics last week. Among the losers against the US dollar were the Aussie (-2.02%), the Loonie (-1.58%), and the Kiwi (-1.24%). Rising against the greenback were the yen ( 1.95%), the euro ( 0.59%), the pound ( 0.33%), and the Swiss franc ( 0.28%).
Day’s news (GMT 3):
- Christmas Eve.
Fig 1. EURUSD hourly chart.
After the breakout of the trend line, the EURUSD pair’s drop came to an end at around the 112th degree at 1.1384 before recovering to 1.1393. Considering that Friday marked the second day of decline in a row for our pair, the fact that the economic calendar is empty, and that there is a reduced trading schedule in the US, today I expect to see the pair go against Friday’s movements to the LB balance line at 1.1420.
Market participants reacted to FOMC member Williams’ speech, who said that the Fed would be keeping a close eye on statistics. If reports are strong, forecasts could change, which could affect the number of projected rate hikes in 2019.
The pair has been trading within a sideways range of 250 pips since mid-November. I think it will stay within this range until the end of the year.