On Thursday the 7th of November, trading on the euro closed down. Volatility was high during the European session. The rise to 1.1092 was brought about by news from China, while the subsequent drop to 1.1036 was caused by the Bank of England meeting.
China and the US have agreed to phase out the tariffs imposed over the course of the trade conflict. This was announced by the Chinese trade minister. The news increased the market’s appetite for risk. The meeting between the US and Chinese presidents Donald Trump and Xi Jinping has been pushed back to next month.
The Bank of England left interest rates at their current level of 0.75%. Two members of the MPC (Saunders and Haskell) out of 9 voted to reduce rates by 25 base points. This came as a shock to many. The GBPUSD pair dropped by 73 pips to reach 1.2794, dragging down the other majors with it and cancelling out the effect of the news from China.
Day’s news (GMT+3):
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- 10:00 Germany: trade balance (Sep).
- 16:30 Canada: unemployment rate (Oct), net change in employment (Oct).
- 18:00 US: Michigan consumer sentiment index (Nov).
Despite the positive news from China and the following rise to 1.1092, the pair missed our target from the 6th of November.
The euro is currently trading at 1.1051, with the 112th degree providing support. The current situation is similar to the 6th of November, so we’ve taken a similar formation as the basis for today’s forecast, in which we expect a rise to the LB balance line at 1.1070, followed by a drop to the 135th degree at 1.1017. The forecast is for Friday and Monday.
On the H4 and H8 timeframes, the indicators point towards an upwards correction, so we don’t expect to reach fresh lows today. If we look at futures on the euro (6EZ19), there are a lot of major sales on the market. There’s not much in the economic calendar today, so pay more attention to technical analysis.