On Tuesday the 25th of June, trading on the euro closed down. Initial growth with a lack of volume led to a 68-pip drop. The euro was also pushed in this direction by a resurgent dollar during the US session, which was boosted by comments made by FOMC member James Bullard. He said that now was a good time to lower rates as a precautionary measure, but spoke out against a 50-base-point decrease, signalling that one rate reduction would be enough.
Fed Chair Jerome Powell maintained that the FOMC’s outlook remained positive despite increased uncertainty. Many in the FOMC see good reason for stronger stimulus, but also don’t want to overreact to individual data releases. Powell noted that unemployment is low, the economy is growing, and inflation is approaching its target level.
Day’s news (GMT 3):
- 11:00 Switzerland: ZEW survey – expectations (Jun).
- 11:30 UK: BBA mortgage approvals (May).
- 15:30 US: durable goods orders (May), goods trade balance (May).
- 17:30 US: EIA crude oil stocks change (21 Jun).
The euro dropped to the 45th degree just as expected. After the correction to 1.1344, the pair stabilised at around the 1.1353 mark. Taking into account the pricing model and the status of the hourly indicators, I’ve concluded that we should expect the pair to consolidate within a range of 1.1344 to 1.1380 today. If the rate closes the day below the balance line, we can expect the rate to drop to 1.1331. I can’t see it dropping any lower than 1.1300.
Still, we can’t be sure, because a few negative words about China from Donald Trump could be enough to sink some of the risker assets. A recovery to 1.14 will be positive for the bulls. There’s no important news for the euro coming out today.