Last Friday we saw euro growth despite the positive data on GDP in the US. However, in accordance with the theory, the American currency had to soar. It means that the large market players have bet on euro growth.
Meanwhile, after an insignificant correction on Monday, a similar price dynamic has been continuing today. This has been happening on the eve of US presidential elections. Last week, the FBI reopened its investigation into Hillary Clinton’s private email usage case. As result, a week before the election Clinton lost her advantage over Trump. This fact put pressure on the traders’ confidence in Hilary Clinton’s victory in the elections.
Taking advantage of this opportunity, the European currency reached its 3-week highs near 1.1090. The currency also got support from the favorable Chinese statistics, which weakened concern about a current economic situation of the second-large economy in the world. The Chinese manufacturing PMI rose 51,2 while the forecast was 50,4.
Today, the market participants’ attention will be focused on the Fed interest rate decision. In September, the regulator has already sounded pretty convincing, having forced the markets to believe in December rate hike. So, in fact, Yellen will not have to seriously toughen rhetoric. She will need just to repeat her previous statements. In this case, the US dollar will be able to rebound from its recent lows.
EUR/USD 4-hour technical analysis:
EUR/USD 4 Hour Chart
- According to SMA based analysis, currently, the long position is more relevant due to the pair has been trading above the moving averages 50, 100 and 200.
- The MACD histogram is located in the positive zone and above its signal line. This provides a buy signal for the euro.
- The RSI is in overbought territory and is directed upward. So, here we have the same buy signal.
- The stochastic oscillator is close to the overbought zone and provides a sell signal, as K line is falling below the B line.
Summarizing our today’s analysis, we can expect a short-term EUR/USD correction, and then growth resumption of the single European currency.