EURUSD: Sideways Movement Below 1.2360 Continues

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On Monday the 5th of March, trading on the euro closed slightly up. The single currency recovered to 1.2349 after having dropped to 1.2269. The dollar has yet to readjust since the introduction by the US of aluminium and steel import tariffs, so the euro bulls, smelling weakness, have quickly seized the initiative.

UK Prime Minister Theresa May’s words also gave a boost to European currencies. She said a transitional Brexit deal was close to being agreed. This facilitated a rise for the pound against the dollar, which had a positive influence on other pairings with the dollar.

Economic data:

USA: ISM non-manufacturing PMI (Feb) – 59.5 (forecast: 59.1, previous: 59.9).

Day’s news (GMT+3):

Fig 1. EURUSD hourly chart. Source: TradingView

On Monday, instead of a V-model, we got a W-model. The LB line and the 67th degree combined to provide support to buyers. On the whole, my predictions for yesterday came to pass as I expected.

US trade policy remains the focus of the week. Officials from many different countries have voiced concerns over US actions in terms of trade relations. Trump has let everyone know through Twitter that he is not bothered by this.

This week’s main event is the ECB meeting and Mario Draghi’s subsequent press conference. As always, markets will be listening to Draghi closely for any hint of curtailing the QE program.

For today, I’m predicting the formation of a V-model from the low on the 45th degree. Taking the Italian election results into account, the euro could drop to the 67th degree, as it did yesterday.

If my prediction comes true and markets close around 1.2353 – 1.2360, we’ll most likely see growth on Wednesday to 1.2440. This will be just in time for the ECB meeting an NFP report.