My Tuesday’s expectations came off in full. The euro/dollar fell one point short of the 1.0940 target. The falling stock indices and oil prices helped the euro strengthen.
The European stock indices fell by 2% on average and the US ones fell from between 1.9% and 2.3%. Brent fell 4.5% to $32.50. The price of oil came under pressure after the National Iranian Oil Company’s (NIOC) CEO Javadi came out saying that Iran is to up its exports to 2.3 million barrels per day this year.
Main news of the day (EET):
10:15 – 11:00, service sector PMI (Spain, Italy, Germany, France, Eurozone);
11:30, UK service sector PMI;
12:00, Eurozone December retail sales;
15:15, US ADP January employment changes;
16:45, US service sector PMI from Markit for January;
17:00, ISM January business activity index;
17:30, US oil reserve changes.
The main news for today is the UK PMI and ADP, in addition to PMI and ISM data from the US. As soon as the euro/pound cross U-turns upwards, I expect to see a break in the trend line.
Intraday target maximum: 1.0962, minimum: 1.0896, close: 1.0928;
Intraday volatility for last 10 weeks: 102 points (4 figures).
The euro/dollar is trading close to the LB. On my forecast I’ve gone for a fall in the euro to 1.0896/1.0900, with a subsequent rebound to 1.0962. If the rate doesn’t recoil from 1.0900, ready yourselves for a flat until Thursday. If we see a fall below 1.0890, the euro will head for 1.0860.
The euro/pound hasn’t strayed too far from the balance line. For Wednesday I reckon we’ll see a growth to the U2 at 0.7618. At European trade opening there are risks the rate will fall to 0.7558. The euro’s weak point will be when the UK PMI comes out. If the data is strong, the euro will be under pressure. If it’s weak then the euro/pound will shoot up and support the euro as it did yesterday.
The price stopped by the trend line. I expect a break on Wednesday. A break of the trend won’t cause interference. A growth above 1.0985 will leave 1.1025 as a target level.
The euro/dollar will stay in a sideways but I’m waiting for an upwards shoot.
Vladislav Antonov, Alpari analyst