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Trading on the Euro closed down on Wednesday. Our currency pair traded at 1.0869 for 7 hours before falling to 1.0853 on the back of a sharp rise in US 10Y bond yields. As bond yields started to fall in Asia, the price returned to 1.0871 level.
Head of the ECB, Mario Draghi, wasn’t able to unhook the Euro from its price level of 1.0869. Draghi said in his statement that the bank is in no hurry to raise interest rates or to reverse its assets purchase program. The struggle with inflation goes on.
Market expectations:
On Wednesday, sellers allowed buyers to return to the trend line (1.0898), which was broken through on the 9th of May. The Euro subsequently renewed its weekly minimum as the dollar rose across the board.
At the time of writing, the Euro is trading at 1.0872 USD. The single currency appreciated in Asia after its slide to 1.0853. This morning’s trading is following the same dynamics as yesterday’s. That’s not to say that today’s price movements will coincide completely with those on the 10th of May.
It’s clear to see that the Euro is reluctantly retreating. I believe that sellers will update the minimum, from which they will cash in on short positions. I’ve chosen a modest target of 1.0844, although in the moment, the price could slip as far as 1.0822 (50% of the gap that appeared after the first round of the French presidential election on the 24th of April).
In addition, the Bank of England will hold a meeting today. This is expected to produce some high volatility on the EUR/GBP cross. Depending on the direction of the cross and on US bond yields, traders will open their positions accordingly.
Day’s news (GMT+3):
- 08:00 Japan: Eco Watchers Survey (Apr);
- 09:00 Germany: wholesale price index (Apr);
- 10:15 Switzerland: CPI (Apr);
- 11:00 Eurozone: ECB economic bulletin;
- 11:30 UK: manufacturing production (Mar), trade balance (Mar), industrial production (Mar);
- 13:25 USA: Fed’s William Dudley speech;
- 14:00 UK: BoE quarterly inflation report, BoE interest rate decision, BoE asset purchase facility;
- 15:00 UK: NIESR GDP estimate (Apr);
- 15:30 Canada: new housing price index (Mar). USA: PPI (Apr), initial jobless claims (May 5), continuing jobless claims (Apr 28);
- 17:30 Canada: BoC review.
