EURUSD dropped to 1.1803. EURUSD came under pressure from European equity indices, as well as a sharp decline in the EURGBP cross pair. Equity benchmarks regained their footing during the North American session. The largest gains were posted by the Nasdaq ( 1.40%). Notably, top White House economic advisor Larry Kudlow said that the US stock market is experiencing a V-shaped recovery as reflected by performance in the country’s economy. This comment could help extend the rally.
The number of US jobless applications and the Philadelphia PMI came in worse than expected. However, market participants shrugged off this news.
Today’s macro agenda (GMT 3)
From 10:15 to 12:30: August industrial manufacturing and service sector data are due out in France, Germany, the Eurozone and the UK
15:30 Canada: retail sales (June)
16:45 US: production business activity and PMI services index (August)
17:00 Eurozone: CPI (August), US: existing home sales (July)
20:00 US: Baker Hughes weekly oil rig count
The price retraced to the balance line, but the recovery came through a drop to the 157th degree of the Gann angle (1.1803). After rebounding from 1.1802 to 1.1869, a long lower shadow formed on the daily candle. The current candlestick pattern implies extension of the upward trend.
Given that the price is below the balance line, and the hourly indicators have entered oversold territory, our forecast calls for a corrective move to 1.1850, followed by a recovery to 1.1914. In this case, we rely more on yesterday's reversal formation and a possible upward rebound in the EURGBP cross.
In other news, China's trade minister said the US and China have agreed to hold trade talks in the coming days. This is a net positive factor for risk assets. The market is still under pressure after the release of the FOMC minutes as market participants continue to brush aside positive news.