On Tuesday the 5th of March, trading on the euro closed down. The rebound from 1.1316 didn’t come to pass. The bulls defended 1.1320 for 6 hours before giving way. The pair then dropped to 1.1290. The euro slid against the dollar on the back of positive US data (ISM non-manufacturing index and new home sales).
At the beginning of the European session, the euro was bought up on the crosses by day traders, but this wasn’t enough to prop up the support at 1.1320 on the EURUSD pair. The downside pressure from a broadly stronger US dollar proved too much. Later, rumours started circulating about another round of TLTROs from the ECB in an attempt to address slowed economic growth. This heaped added pressure on the euro towards the end of the day.
Day’s news (GMT 3):
- 15:15 UK: BoE’s Cunliffe speech.
- 16:15 US: ADP employment change (Feb).
- 16:30 US: trade balance (Dec).
- 16:30 Canada: international merchandise trade (Dec), labour productivity (Q4).
- 18:00 Canada: BoC interest rate decision and statement.
- 18:30 US: EIA crude oil sticks change (25 Feb).
- 20:00 US: Fed’s Williams speech.
- 22:00 US: Fed’s Beige Book.
On Tuesday, the bulls tried to induce a rebound from 1.1309 to no avail. In Wednesday’s Asian session, the euro was trading around Tuesday’s low of 1.1290. All the majors are trading down against the US dollar.
There’s currently no sign of a reversal, so judging by the MA line, I’m going to predict a drop to its lower boundary at the 112th degree and the lower boundary of the wedge formation. At 17:00 EET, we’re likely to see a sharp rebound. If this doesn’t happen, there’s a chance the pair could drop to 1.1245. In order to get a correction to 1.1345, the bulls first need to break 1.1315.
Remember that the key events for the euro this week are the ECB meeting, Mario Draghi’s press conference, and the US employment report coming out on Friday.