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On Tuesday, the euro once again closed down against the dollar. The single currency depreciated against the US dollar after Fed Chair Janet Yellen addressed Congress. She announced that the central bank may decide to raise interest rates in one of the forthcoming meetings. She gave no indication, however, of when exactly this might happen.
US 10-year bond yields surged by 2.5% to 2.5031%. For bonds, this is a huge amount to grow in the space of an hour. Following this surge, the EUR/USD rate fell to 1.0561.
Market expectations:
On the daily time frame, buyers broke through the 1.0580 support. In doing this, they’ve paved the way to a further drop to 1.0457 as the current political climate in Europe will push the rate further in this direction. If you look at the intraday price dynamics over the past few days, cyclical analysis shows the euro always rises after depreciating during the US session.
The situation is basically as follows: as European markets open, the rate will fall to 1.0555, then in the US, we’ll see growth to 1.0602 (lb). If we see immediate growth as European markets open, we can expect to see price movements in the same pattern as the last couple of days.
Day’s news (GMT+3):
- 12:30 UK: average earnings (Jan), claimant count (Jan), ILO unemployment rate (Jan);
- 13:00 Eurozone: trade balance (Dec);
- 16:30 Canada: manufacturing shipments (Dec);
- 16:30 USA: Consumer Price Index (Jan), Consumer Price Index Core (Jan), retail sales (Jan), retail sales control group (Jan), NY Empire State Manufacturing Index (Feb);
- 17:15 USA: capacity utilisation (Jan), industrial production (Jan);
- 17:30 UK: CB Leading Economic Index (Jan);
- 18:00 USA: Fed’s Yellen speech, NAHB Housing Market Index (Feb);
- 18:30 USA: EIA crude oil stocks change (week 5-10 Feb);
- 20:45 USA: FOMC member Harker speech.
EURUSD rate on the hourly. Source: TradingView
Intraday forecast: low: 1.0555, high: 1.0602, close: 1.0582
