On Tuesday the 3rd of September, trading on the EURUSD pair closed significantly up. The daily candlestick has a bullish body, with a low of 1.0926 and a long tail. The pair reversed following weak US data and comments from FOMC member James Bullard.
The US manufacturing PMI came out below the 50-point mark, which signals a slowdown in economic growth and is the lowest value seen since January 2016. This took its toll across all exchanges, while Bullard sent the dollar into an even deeper correction.
Head of the St. Louis Fed James Bullard said that interest rates are too high for the current situation due to the drop in government bond yields and the influence of the US-China trade conflict. He is in favour of immediately slashing the key rate by 0.50%. These remarks sent Brent oil up by 2.7% and the EURUSD pair by 0.52%.
Day’s news (GMT 3):
- 10:50 France: Markit services PMI (Aug).
- 10:55 Germany: Markit services PMI (Aug).
- 11:00 Eurozone: Markit services PMI (Aug).
- 11:30 UK: Markit services PMI (Aug).
- 12:00 Eurozone: retail sales (Jul).
- 15:30 US: trade balance (Jul).
- 15:30 Canada: international merchandise trade (Jul).
- 17:00 Canada: BoC interest rate decision and rate statement.
- 21:00 US: Fed’s Beige Book.
On Tuesday, the bulls managed to recover all their losses from the morning session to set up a reversal candlestick on the daily timeframe. They were met with resistance at the 45th degree (1.0983), which they are now trying to break through.
The pair rebounded to reach the balance line. Since there was no downwards impulse from here, and the pair has spent the last 15 hours trading sideways within a narrow range, we’re expecting the correction to now continue to the 67th degree.
Washington and Beijing are yet to agree on the terms of their continued negotiations. As such, any negative news on this front will deter the bulls from entering the market.