On Tuesday the 22nd of January, trading on the EURUSD pair closed slightly down. During the US session, the bulls managed to recover all their losses and hit a new intraday session high. The euro rose from 1.1336 to 1.1374 before closing at 1.1352.
The greenback pared all its gains against the majors after the release of disappointing housing data, which showed a decline in home sales in December to their lowest level in 3 years, as well as slowed growth in house prices.
Day’s news (GMT 3):
- 12:30 UK: MPC member Broadbent speech.
- 14:00 UK: CBI industrial trend survey – orders (Jan).
- 16:30 Canada: retail sales (Nov).
- 17:00 US: house price index (Nov).
- 18:00 US: Richmond Fed manufacturing index (Jan).
- 18:00 Eurozone: consumer confidence (Jan).
My target from yesterday’s prediction was reached. However, I don’t feel that my prediction was correct on the whole given that the rate dropped to 1.1336.
Yesterday’s movements created a V-shaped model. This is a reversal formation, so after 7 lower lows and a breakout of the trend line, we can expect to see a correction to 1.1384. This correction could gather pace as traders close their short positions ahead of the ECB meeting. My second target level is 1.21425. Before the rate begins its recovery, the 1.1358 mark is likely to be tested. If the hourly candlestick closes below 1.1350, then this recovery will not happen. In any case, we must wait for the ECB meeting to conclude and for Mario Draghi to speak.