EUR/USD: Trend Line On The Hourly Timeframe Has Been Broken Through

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The euro rate closed down on Thursday. Hawkish comments from Fed members and the growth of US 10-year bond yields continue to act as a support for the dollar. They’re readying the market for a rate hike during the Fed’s meeting this month, at least as traders see it.

According to the latest data from CME Group’s FedWatch Tool, the probability of a rate hike in March has gone up from 66.4% to 75.3%, in May from 71.4% to 79%, and in June from 84.6% to 89.6%.

On Thursday, US 10-year bond yields grew by 1.14% to 2.486% (up 0.97% on 02/03/17). The EUR/USD exchange rate fell somewhat reluctantly as the growth in US bond yields was met with similar growth from their German counterparts. Buyers tried several times to induce some upwards movement from 1.0500, and only on the third attempt did they manage to break through the trend line.

Market expectations:

At the time of writing, the euro is selling at 1.0517. The rate bounced from 1.0495, but for this rebound to gather momentum, we must see the hourly candle close above 1.0530. If US 10-year bond yields rise above 2.50%, then perhaps we can expect the euro to fall to 1.0469 or lower. This will depend on the tone of the comments to be given today by Fed members Charles Evans, Jeffery Lacker, Stanley Fischer, Jerome Powell and Janet Yellen.

If US bonds stay under 2.50%, then the dollar will most likely undergo a correction and the euro will strengthen to 1.0540 towards the end of the day.

Day’s news (GMT+3):

10:00 Germany: retail sales (Jan);

11:55 Germany: Markit services PMI (Feb);

12:00 Eurozone: Markit services PMI (Feb);

12:30 UK: Markit services PMI (Feb);

13:00 Eurozone: retail sales (Jan);

17:45 USA: Markit services PMI (Feb);

18:00 USA: ISM non-manufacturing PMI (Feb);

18:15 USA: Fed’s Evans speech, Fed’s Lacker speech;

20:15 USA: FOMC member Powell’s speech;

21:00: Fed’s Fischer speech, Fed’s Yellen speech.