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May 11th, market is ready to recover to 1.2170

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@notesfortrader
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On Monday, May 10, at the end of the day, the euro fell by 0.28% to 1.2129. During the day, the single currency was under pressure due to the fall of the EUR / GBP cross pair. The British pound posted the largest gains among major currencies despite the leader of the Scottish National Party (SNP) said another independence referendum was imminent. SNP won the election, but did not gain an absolute majority. Prime Minister Boris Johnson ruled out the possibility of another vote. By buying the pound, market participants showed that they do not expect a new referendum on Scottish independence.

The rise in the yield on 10-year US Treasury bonds to 1.609%, as well as the fall in US stock indices, caused a corrective movement in the dollar and major pairs.

The dollar fell strongly after the release of the April employment report on Friday. The data showed a sharp slowdown in hiring and an unexpected rise in unemployment. The data bolstered the Fed's stance on low interest rates and reinforced confidence that the central bank will not rush to cut stimulus.

Scheduled statistics (GMT +3):

  • 12:00 Germany and the Eurozone will publish the ZEW Business Sentiment Index for May.
  • 17:00 The US will announce a change in the level of vacancies and turnover from the Bureau of Labor Statistics for March.
  • 17:30, the Governor of the Bank of England Bailey will deliver a speech.

Current situation:

At the time of this writing, the euro is worth 1.2126. The price from the U3 line (sma 55. + 1%) returned to the balance line (sma 55). The balance line was strengthened by the 45th degree (2) from the top of 1.2178 and the trend line (4).

Growth is constrained by sales of US bonds. Buyers need to gain a foothold above 1.2155 as quickly as possible. A breakdown of the resistance will give them strength to retrace the price to 1.2170. All the crosses with the euro are on the buyer's side. Good place to bounce off 1.2125. The sooner the price returns to the level of 1.2175, the higher the likelihood of the continuation of the strengthening of the euro to 1.2265.

Summary: the euro has corrected to the balance line after Friday rally on weak data on the US labor market. Being on the balance line (sma55). The market is at the point of balance, from which a new growth of the pair can begin with the target of 1.2265. The news background is scarce for Europe, so buyers need to gain a foothold above 1.2155 as quickly as possible.

Posted Using LeoFinance Beta