By Gabriel Ojimadu, Alpari
Friday’s trading on the euro/dollar pair closed slightly down. Sellers erased nearly all their gains in the US session after the news that former national security advisor Michael Flynn was ready to give testimony against Trump. The euro jumped 84 pips from 1.1851 to 1.1935. Once markets had calmed down, the euro receded to 1.1895.
Day’s news (GMT +3):
- 12:30 UK: PMI construction (Nov).
- 12:30 Eurozone: Sentix investor confidence (Dec).
- 13:00 Eurozone: PPI (Oct).
- 18:00 USA: factory orders (Oct).
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Fig 1. EURUSD hourly chart. Source: TradingView
My expectations of a decline on Friday proved right, expect that before the drop, the euro the euro made it to 1.1940.
The dollar has opened up in Monday’s Asian session as traders react to the news coming out of the US buy buying dollars. US President Donald Trump on Sunday denied accusations of collusion with Russia, tweeting that Michael Flynn was fired back in February for lying both to the Vice president and FBI. The White House said that it did not feel under threat by Flynn’s admission of guilt to passing on false information to the FBI.
As the session opened, the euro dropped to 1.1856. The price had restored by 67 degrees on Friday, before dropping by the same amount today in Asia. At the time of writing, the euro is trading at 1.1868. A wedge is forming on the hourly timeframe, although it’s as yet unclear how the price will behave itself around its lower boundary.
Considering today’s opening and the bare European economic calendar, I tink the price should go towards the TR2 trend line at 1.1837. From here, I expect the euro to rise to the LB balance line (sma 55).