By Gabriel Ojimadu, Alpari
On Wednesday the 13th of September, the euro/dollar rate closed down. The euro lost more than 100 pips of ground against the dollar over the course of the day, falling to 1.1873. It was revealed that Donald Trump is set to announce the details of his proposed tax reform legislation next week. According to a statement on the budget by the speaker of the House of Representatives, the new legislation could come into force by the end of the year.
The British pound has collapsed against the dollar, shedding 145 pips. This drop began in Europe after the publication of employment data in the UK. Buyers were disappointed by the average earnings index, which performed worse than expected. Because of this, the euro has gained some temporary support against the dollar through the cross.
Day’s news (GMT+3):
- 10:30 Switzerland: SNB interest rate decision.
- 14:00 UK: BoE interest rate decision, BoE asset purchase facility.
- 15:30 Canada: new housing price index (Jul).
- 15:30 USA: CPI (Aug), initial jobless claims (8 Sep).
- 18:30 Germany: German Buba president Weidmann’s speech.
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EURUSD rate on the hourly. Source: TradingView
The price is currently moving along the D2 MA line. I think that the price will continue in its current direction until 1.1858. From the 112th degree and the lower boundary of the downwards channel, we can start to think about upwards movement towards the LB balance line. At the moment, the 45th degree is projected from the 1.1870 low. If the euro rate falls as far as 1.1858, the 45th degree will shift to 1.1913.
Be warned, you shouldn’t act on the basis of my forecast alone. It doesn’t take fundamental factors into account such as the BoE’s meeting and US inflation data. Statistics are more important than technical analysis, so you should always make an assessment of the risks involved in a trade and set stop levels accordingly. Fundamentals can break any strong reversal model. The smaller the upwards rebound, the higher the probability of dropping to 1.1780 on Friday.