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Trading on the euro on Monday closed slightly up (+4 points). During trading in Europe, buyers were unable to renew the Asian maximum of 1.0633. Following the EUR/GBP cross’s fall, and yesterday’s national holiday in the US, the EUR/USD rate spent the day within a 30-point range, from 1.0603 to 1.0633.
Markets in the US were closed owing to national President’s Day celebrations. The currency market has maintained a low volatility up to the opening of the Asian session.
Market expectations:
During trading in Asia, the EUR/USD has fallen to 1.0577. this downwards movement came after Philadelphia Federal reserve head Patrick Harker’s announcement that the FOMC may raise interest rates when they meet in March. Given that markets reacted to this news in Asia, we can expect a similar reaction when he gives his speech today at 20:00 (GMT+3). Also planned for Tuesday are statements from two other Fed members, namely Neel Kashkari and John Williams.
This morning’s weakening of the euro leads me to consider the possibility of a further depreciation to around 1.0550. From a technical point of view, the situation is contradictory. If US 10-year bond yields go into the red, and the EUR/GBP cross restores to 0.8526, then my case for further depreciation will be mooted.
Day’s news (GMT+3):
- 10:00 Switzerland: trade balance (Jan);
- 11:30 Germany: Markit PMI composite (Jan), Markit manufacturing PMI (Jan), Markit services PMI (Jan);
- 12:00 Eurozone: Markit manufacturing and services PMI (Feb);
- 12:30 UK: public sector net borrowing (Jan);
- 16:50 USA: FOMC member Kashkari speech;
- 17:45 USA: Markit manufacturing and services PMI (Feb);
- 18:30 Australia: CB leading indicator (Dec);
- 20:00 USA: FOMC member Harker speech;
- 23:30 USA: FOMC member Williams speech.
(Click on image to enlarge)
EUR/USD rate on the hourly. Source: TradingView
Intraday forecast: low: 1.0550 (112th degree), high: 1.0615 (current in Asia), close: 1.0575.
