Euro/Dollar: Likely Growth to U3

Hourly

Yesterday’s Trading:

On Wednesday the US was on holiday. The stock markets were operating as normal, but the banks and the bonds market were off. Trader activity was low. Draghi didn’t mention monetary policy so there was no reaction to his speech. His speech could have a significant effect on the market during today’s press conference after the ECB has convened.

The euro/dollar returned to the LB after a fall to 1.0705 at the American session. Asia today saw the EUR/USD lift to 1.0779 following the Aussie after the publication of strong Australian labour market data. Now let’s have a look at what awaits us today.

Main news of the day:

• 09:00, German CPI for October;

• 10:30 and 12:30 EET, Draghi to speak;

• 12:00 EET, September Eurozone industrial production changes;

• 15:30, US initial unemployment benefit applications data;

• 16:30 EET, Fed’s Yellen to speak;

• 19:00 and 19:15 BoE’s Haldane and FOMC’s Dudley to speak.

Market Expectations:

On Thursday, trader attention will be focussed on German CPI and Eurozone industrial manufacturing. At 15:30 EET a US labour market report will be out. The situation is a little ambiguous since gold and oil are down and the Aussie has strengthened sharply against its US counterpart even with low copper prices. The pound/dollar has won back 50% of last week’s fall: it’s now trading at an important level near the trend line.

Technical Analysis:

• Intraday target maximum: 1.0847, minimum: 1.0750, close: 1.0820;

• Intraday volatility for last 10 weeks: 119 points (4 figures).

The euro dollar slid to 1.0705 and then bounced back to 1.0779 after a pinbar on the daily. What we really don’t want to see is the euro head above 1.0800: although the risk of this is be high. We need to keep an eye on the pairs; especially the euro/pound. I’ll take a risk and say that I reckon we’ll see a growth to the U3.

I would even say that we can’t write off the forming of an upward triangle from 1.0673. In this case the euro/dollar will fall to 1.0735 and then shift upwards again to 1.0785.

Market participants are expecting the US Federal reserve to put up their rates in December, so the market is now set to confuse us before the Fed convenes.

Daily

After the hammer candle, the euro/dollar bounced back to 1.0779. Due to the strengthening of the GBP and AUD, risks of the 1.0790 resistance and the trend line being passed are up. The oscillator stochastic has flipped downside up: a bull signal. It seems the bulls have turned the bears around. Now to the Weekly.

Weekly

An upward correction can be seen on the daily. It’s difficult to say what amplitude the movement and duration will be like for the correction since the picture is mixed between the key pairs. The price for the moment is sat below 1.0840 and from the euro I’m expecting to see a fall to 1.0520 (14/04/15 minimum).