The EUR/USD Has Overheated, and It's Not Because of the Weather

Fundamentals

Jobless claims data in Australia and the United States were published yesterday. At 5.7%, unemployment in Australia fell slightly compared to the forecast of 5.9%.
The number of initial jobless claims in the United States dropped to 232,000, which is 4,000 claims fewer than the previous number. The change in retail sales inclusive of fuel costs also came out yesterday at 8:30 am GMT.
Today Canada’s consumer price index (CPI) will be published at 12:30 pm GMT. Let’s see how the CPI has changed over the last 2 years. As you can see, the current CPI matches that of December 2016. Analysts expect the number to edge up to 1.7% p.a.



You’ll recall that the next meeting of the Bank of Canada, at which it will decide on the discount rate will be next week on May 24, 2017. Given the CPI forecast and the general economic environment in Canada, we should hardly expect a rise in interest rates.
This evening we advise oil traders to watch for the release of the number of operating drilling rigs from Baker Hughes.


Stocks

Wal-mart Stores issued a very good report yesterday, with $1 profit per share. With the report, the company's shares, which are traded on the NYSE, gapped up, adding 150 points yesterday at the opening. Technically, it is quite reasonable to expect a downward correction to $76, after which one should evaluate the situation depending on how the shares are behaving.
As we said yesterday, the DJIA reversed, closing the second gap of April 24, 2017. Today we might see a technical bounce up to 20750. This might be because of the closure of short positions before the weekend and the index’s emergence from oversold territory. The reversed Williams %R also points to a bounce - it's not yet sending signals on the daily charts, but is getting fairly close to it.
The Russian stock market sank yesterday, closing 20 points below the opening level. The MICEX Index broke through both the 9-day moving average and the middle Bollinger band. The index is now in a fairly wide corridor at 1925 – 2050 points. Bearing in mind the appearance of sell signals, we won’t rule out a continuation of the bears’ attack and further decline.
On the Russian stock market, the report from UES, the federal electrical grid company, is expected today.

Currency Market

The bulls’ attempts yesterday to break through the 9-day moving average on the AUD/CAD daily charts were not met with success. The pair continues to consolidate near 1.0110. The MACDF is still sending a weak buy signal, so we advise anyone who wants to trade on the rise to wait for confirmation signals and open up. On the other hand, the picture is a little contradictory, since graphically, an inverted flag is forming, which may result in the asset's short-term decline. Our feelings are still on the side of the bulls.
The fairly intense overheating of the EUR/USD pair indicates the possibility of a technical correction. The drop in basic oscillators (Williams %R, RSI, etc.) into oversold territory and their attempt to reverse points to this, among other things. It is still early, however, to talk about the possibility of opening downward positions. As always, a more convincing confirmation is needed. This confirmation could, for example, come in the form of a Heikin Ashi reversal.

Olymp Trade Review