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Yesterday, on Monday, trading on the euro/dollar pair closed up. Euro bulls managed to restore the price to 1.1658, partially recovering the losses incurred by the ECB meeting and the strong US GDP data for the third quarter.
The euro rose against a dollar losing ground on all fronts. This correction came about after it was revealed that some of Trump’s former aides are being investigated over alleged contact with Russian officials during the presidential campaign. The correction was also helped along by a drop in US bond yields. Anticipation of Wednesday’s Fed meeting and Trump’s announcement of his candidate for Fed Chair is adding to the sense of nervousness on the market.
Day’s news (GMT+3):
- 06:00 Japan: BoJ interest rate decision and monetary policy statement;
- 08:00 Japan: housing starts (Sep), construction orders (Sep);
- 09:30 Japan: BoJ press conference;
- 09:30 France: GDP (Q3);
- 10:45 France: CPI (Oct);
- 13:00 Eurozone: CPI (Oct), GDP (Q3), unemployment rate (Sep);
- 15:30 Canada: GDP (Aug), industrial product price (Sep);
- 16:00 USA: S&P/Case-Shiller home price indices (Aug);
- 16:45 USA: Chicago PMI (Oct);
- 22:30 Canada: BoC governor Poloz’s speech.
Fig 1. EURUSD rate on the hourly. Source: TradingView
The news surrounding Trump and the drop in US bond yields changed the price’s direction during the US session. Instead of 1.1555, we saw 1.1655. The euro ran out of steam around the 67th degree at 1.1656. From there, the price dropped to 1.1625 (LB).
An upwards channel has formed over the last 38 hours with a range of 45 pips. At the time of writing, the euro is trading at 1.1637. I’m expecting the price to exit this channel downwards somewhere between 14:00 and 16:00 today. Taking the upcoming Federal Reserve meeting into account, the correction could last until Thursday. Futures suggest that interest rates will be maintained at their current levels on the 1st of November.
