EURUSD: Euro Could Retreat To 1.2385 Ahead Of The ECB Meeting

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On Tuesday the 6th of March, trading on the euro closed up. News from North Korea instilled buyers with some fighting spirit. This news eased geopolitical tensions and created an appetite for risk. The euro rose against the dollar by 92 pips, moving from 1.2328 to 1.2420.

North Korea has agreed to hold talks with the US regarding its nuclear program. US factory orders yesterday missed expectations, posting its biggest decline in 6 months. Meanwhile the US’s decision to impose import tariffs on aluminium and steel has continued to pile pressure on the greenback.

Economic data:

USA: factory orders (Jan): -1.4% (forecast: -1.1%, previous: 1.8%).

Day’s news (GMT+3):

10:45 France: trade balance (Jan).

11:00 Switzerland: foreign currency reserves (Jan).

11:30 UK: Halifax house prices (Feb).

13:00 Eurozone: GDP (Q4).

16:15 USA: ADP employment change (Feb).

16:30 USA: trade balance (Jan), nonfarm productivity (Q4), unit labour costs (Q4).

16:30 Canada: imports (Jan), exports (Jan), labour productivity (Q4).

18:00 Canada: BoC interest rate decision and rate statement.

18:30 USA: EIA crude oil stocks change (2 Mar).

22:00 USA: Fed’s Beige Book.

Fig 1. EURUSD hourly chart. Source: TradingView

On Tuesday, I was expecting the euro to drop to 1.2307. However, it only made it as far as 1.2338. The euro crosses prevented the bears from advancing any further. Buyers broke the 1.2360 resistance on the back of the news from North Korea, after which the rise gathered pace to reach 1.2414. My expectations were proven wrong.

In today’s Asian session, the pair has moved up to 1.2429. Three subsequent higher highs along with declining values on the AO indicator is usually a bearish signal. However, most of the euro crosses and safe haven assets are trading up. Because of this, buyers could hit a new high before the downwards correction begins. When the correction kicks in, I’m expecting the euro to retreat to 1.2385.