On Tuesday the 23rd of April, the euro dropped to 1.1192 against the US dollar. Trading on the pair closed at the 1.1227 mark, but pressure on the euro remains as a result of the collapse of the Aussie dollar this morning.
The greenback made ground against the majors following the publication of housing data. These figures suggest a pickup in economic growth, which in turn reduces the likelihood of interest rates being lowered by the Fed. Traders are now looking ahead to US GDP data for Q1 on Friday.
Day’s news (GMT 3):
- 11:00 Switzerland: ZEW survey – expectations (Apr).
- 11:00 Germany: IFO – expectations (Apr), IFO – business climate (Apr), IFO – current assessment (Apr).
- 11:30 UK: public sector net borrowing (Mar).
- 17:00 Canada: BoC interest rate decision and statement, BoC monetary policy report.
- 17:30 US: EIA crude oil stocks change (19 Apr).
- 18:15 Canada: BoC press conference.
On Tuesday, US data helped the bears revisit the 1.1226 low. The pair then rebounded from the 112th degree and the support (drawn from the 1.1179 and 1.1184 lows).
In the Asian session, the drop recommenced on the back of the Aussie dollar’s collapse, which occurred as a result of weak CPI data for Q1. Following this, demand for short positions on USD shot up. Investors began hedging their bets against a further drop on AUD based on expectations that the RBA will lower interest rates at next month’s meeting.
A session low was recorded at 1.1201. There’s a risk of dropping even lower. The big players will want to activate all the stop levels below the support before opening their long positions and heading north. In my forecast, I expect a recovery to the trend line at 1.1242. The 45th degree is sitting at 1.1245. I can’t see the pair going any higher than this.