On Monday the 22nd of July, trading on the euro against the dollar took place within a corridor of 1.1225 to 1.1206 across all sessions, closing around the 1.1208 mark. Such a narrow trading range was down to a lack of any significant news or macroeconomic data. In today’s Asian session during RBA Deputy Governor Kent’s speech, we got a breakout of a crucial zone between 1.1194 and 1.1189, which gives us reason to believe that the market is set to decline.
Day’s news (GMT 3):
- 11:00 Eurozone: ECB bank lending survey.
- 11:30 UK: FPC minutes.
- 13:45 UK: Tory leadership contest results announcement.
- 15:15 UK: BoE’s Haldane speech.
- 16:00 US: housing price index (May).
- 17:00 US: existing home sales (Jun).
The breakout of 1.1194 gives us a sell signal on the EURUSD pair, with a rough target of 1.1108. In the long term, despite expectations that the dollar is set to rise against the euro, it’s perfectly feasible that things will work out differently. Given the escalation of currency conflicts between the ECB, the Fed, and the banks of Japan and China, along with forthcoming rate slashes, it’s impossible to say conclusively that the dollar is set to rise.