EURUSD: Bulls Trying To Defend 1.1650

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On Thursday the 30th of August, trading on the EURUSD pair closed down. After an unsuccessful attempt by bulls to return the rate to 1.1734, the euro shed 65 pips against the dollar to reach 1.1642.

The US dollar index started growing on the back of a retreat from risky assets caused by a decline in currencies from developing countries (Turkish lira, South African rand, and the Argentinian peso). Moreover, another potential factor that favours the dollar is the positive PCE report released in the US.

Day’s news (GMT+3):

09:00 Germany: retail sales (Jul).

12:00 Eurozone: CPI (Aug), unemployment rate (Jul).

16:45 US: Chicago PMI (Aug).

17:00 US: Michigan consumer sentiment index (Aug).

20:00 US: Baker Hughes US oil rig count.

Fig 1. EURUSD hourly chart.

Current situation:

The EURUSD pair has moved into the sell zone. After breaking 1.1682 (dotted line), the rate slid to the trend line at 1.1642. My expectations for yesterday came off in full, only I didn’t manage to take advantage of the price jump to 1.1718 and short the euro.

On the hourly timeframe, from a technical standpoint, factors for the euro are neutral. The pair is trading around the balance line. I reckon the euro bears will test the strength of the trend line in the European session. In my forecast, however, I’m not expecting the euro to drop sharply because I think that the EURGBP pair has found a support at 0.9950. The euro crosses are currently providing a mixed picture.

Considering that hourly cycles and intraday patterns suggest that the euro will close the day up, I’m expecting an initial drop to around 1.1637 – 1.1645, followed by a rebound to 1.1687.