On Monday trades in Europe finished around the level that the Asian session opened at. During the first half of the day the euro weakened against the dollar to 1.1371 due to a sharp fall in the euro/pound cross. There was no news to strengthen the pound. The dealers reckon that the demand for pounds was caused by one big order. Maybe.
In the second half of the day the euro strengthened due to the general weakness of the dollar which, in my opinion, was caused by oil price movements. Before the meeting in Doha, Brent rose to $43.03. Following the rise in oil price, the Canadian dollar rose. The euro/dollar restored to 1.1447 and closed the day at 1.1405.
The euro/dollar is continuing to trade in a seven-day range of 1.1326-1.1453. The euro/pound is readying to fall to 0.7963. Consequently, in the first half of the day we could see a repeat of yesterday.
Germany is publishing its definitive March CPI and the US is releasing import/export prices today. This evening Fed representatives Williams and Lacker are set to speak. In my forecast I”ve gone for a sideways in a 1.1365-1.1420 range.
11:30, UK CPI, RPI and PMI for March;
15:30, US import prices for March;
16:00 FOMC”s Harker to speak;
21:00, US federal budget balance for March;
22:00, FOMC”s Williams to speak;
23:30, FOMC”s Lacker to speak;
23:35, API”s weekly oil reserve report.
We see a 17-hour correction in a narrow range on the euro/pound. If the euro can”t manage to strengthen against the pound, ready yourselves for a break in 0.7994. The closest support runs through 0.7665. A fall in the cross will cause a fall in the euro/dollar. However, since oil isn”t losing value, in the second half of the day the euro could get back all of its losses from the first half of the day. We want to see a close of the day near the LB at 1.1395.
Source:: Euro Weak and Could Return to 1.1370