Yesterday’s Trading:
The euro/dollar on Tuesday managed to get back its losses after falling to 1.1335 in response to strong USA ISM service sector data.
In March, the ISM index for business activity in the US service sector rose to 54.5 against 53.4 in February (forecasted: 53.6). Markit’s PMI rose from 51.1 to 51.3.
It’s worth mentioning that the speedy restoral of the price was facilitated by the strengthening of the euro against the British pound. The rate broke from the balance line and rose from 0.7979 to 0.8053.
Market Expectations:
According to my intraday forecast for Wednesday, I reckon we will see euro movements similar to that of Tuesday. If you’re asking me if the euro will head up: I’d say it could. The euro is receiving a strong support from the euro/pound cross. Euros are being bought for pounds since traders are worried that UK voters will vote for a Brexit in the upcoming referendum.
Another important factor for the euro is the rise in the price of oil after the API report and the strong Chinese service sector data from Caixin. Oil reserves are down. The Caixin showed a March value of 52.2 against a February 51.2. Rising oil prices are having a positive effect on the euro. If the euro/dollar strengthens above 1.1410, then I see only one way: a further strengthening to 1.1440. The key event of the day is the FOMC minutes.
Day’s News (EET):
17:00, Canadian PMI from Ivey for March;
17:30, US oil reserve report from the Ministry for Energy;
21:00, FOMC minutes.
Technical Analysis:
The euro/pound is trading near the trend line on the monthly time frame. On the hourly the support in the cross runs through 0.8016. So that the buyers exit their long positions, we need to see the price passing both 0.8016 and 0.7959 in less than 15 hours. A fixing in the cross will cause a fall of the euro/dollar. As, for example, what happened at yesterday’s opening.
Whilst the euro costs less than 1.1410, nothing threatens the sellers. If there’s a depart from Friday’s range northbound, the weakening of the dollar will continue. On Wednesday I expect to see a V pattern from the euro. The FOMC minutes should make the situation clear.
Forecasts which are made in the review constitute the personal view of the author. Commentaries made do not constitute trade recommendations or guidance for working on financial markets. Alpari bears no responsibility whatsoever for any possible losses (or other forms of damage), whether direct or indirect, which may occur in case of using material published in the review
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.