Yesterday’s Trading:
By the end of Tuesday, the euro/dollar was down. In the first half of the day the USD was down against the majority of key currencies, excluding commodity currencies. The euro/dollar was up to 1.1615 due to a fall in European stock markets and a growth in Eurozone March producer prices.
The price was above 1.16 for no longer than 20 minutes. The weakening of commodity currencies ended up stronger than any news factor. Weak Chinese data and the Australians dropping their rates have had a negative effect on the Aussie. Throughout the day the AUD/USD fell 230 points to 0.7482. Other currencies followed the commodity currencies in weakening against the dollar.
The RBA dropped their rate by 0.25% to 1.75% due to deflationary pressures taking hold and woes regarding the Chinese economy. A fall in oil quotes piled additional pressure on the euro. The euro/dollar dropped to 1.1477.
Market Expectations:
The euro rate is returning to the 1.1437 – 1.1464 support zone which had been a resistance before Monday. The USD is down due to expectations that the US Fed will leave their rates unchanged until autumn. According to the most recent data from the CME Group, the likelihood of us seeing a rise in rates in June is 15% and 29% in July, as opposed to 33% the previous week.
On Wednesday the ADP and NFP indices in the US, plus business activeness indices in the service sector of the Eurozone will see the light of day. The US oil reserve report will be critical for the AUD and CAD.
Day’s News (EET):
From 10:15 to 11:00, service sector business activity indices for Spain, Italy, Germany and the Eurozone;
11:30, UK April construction sector business activity;
12:00, Eurozone March retail sales;
13:15, Bundesbank president Weidmann to speak;
15:15, ADP employment changes in non-agricultural sector for April;
15:30, Canadian and US March balance of trade figures;
16:45, US April service sector PMI;
17:00, US March industrial orders;
17:00, US ISM data on non-manufacturing business activity;
17:30, oil reserves.
Technical Analysis:
Yesterday’s intraday movement formed a pinbar on the daily. According to trading rules, under the pinbar’s minimum a Sell Stop is placed: a stop at the shade’s maximum and a take profit at the opening price’s minimum candle range.
The minimum has been updated in Asia. Therefore there are sale orders for traders already in. I don’t believe in the movements in Asia, so I’m waiting for a correction to the LB around 1.1515/20. It would be enough to have the week close below 1.1450, with the same bar forming on the weekly.
With pinbars, the price rarely leaves the needed direction without a rebound. The price is partially rebounding by 50-60% but the shade is fully covered according to the trend. If you’re looking to enter into short positions with euro, then do so from 1.1515/30. The target for the pinbar is 1.1380. The price level is in the region of the trend line on the hourly or between the D3 and D4.
