EURUSD: expect 1.19 to be tested

January 10, 2018

By Gabriel Ojimadu, Alpari

Previous:

Trading on the euro/dollar pair has closed down for the 3rd day in a row. This downwards correction comes to 173 pips. The euro has come under pressure after news from Japan (via the EURJPY cross), growth in US bond yields, as well as some technical factors.

The Bank of Japan has reduced its purchases of long-dated bonds, which traders have taken to mean that the bank is winding down its stimulus program this year. US bond yields have risen from 2.48 to 2.56 (+3.2%).

Aside from the above, traders had some other negative factors in mind during the downwards correction, namely the upcoming parliamentary elections in Italy as well as the difficulties in forming a government in Germany. In the US session, the euro dropped to 1.1916 and the pair is currently going through a correctional phase.


Get our Weekly Commitment of Traders Report: - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.




Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter






Day’s news (GMT+3):

  • 10:45 France: industrial output (Nov).
  • 12:30 UK: industrial production (Nov), manufacturing production (Nov), total trade balance (Nov).
  • 16:00 UK: NIESR GDP estimate (Dec).
  • 16:30 Canada: building permits (Nov).
  • 16:30 USA: import price index (Dec).
  • 18:30 USA: EIA crude oil stocks change.

Fig 1. EURUSD hourly chart. Source: TradingView

My predictions for yesterday rang true. The bears reached both their targets (1.1945 and 1.1925). Since the euro crosses were also trading down, our main pair didn’t experience any intraday rebounds.

A correction has started from 1.1916. Sellers have been trying to break this level down for 4 hours, to no avail. Judging by the hourly indicators, the correction seems to be over, so today I’m predicting a drop to 1.1900. I don’t think our pair will drop any further than this given that the TR3 trend line has been broken through.