The euro closed yesterday with a rise of 34 points on information about the readiness of the US and China to conclude an interim trade agreement – “comprehensive,” according to Trump, the parties will not have time to conclude a trade deal purely technically. China is ready to increase purchases of American agricultural products. In business media, the growth of the euro on this news is explained as investors withdrawing from the safe-haven currency (dollar) and their willingness to buy risk (stocks). But the fact is that this trade agreement is more profitable for the United States, therefore, revaluation of this event will soon come and the dollar will strengthen. At the same time, the main impulse in the market was given by the strongest growth of the British pound on the news about a likely Brexit deal.
On the daily chart, the price is trying to break above the red indicator line of balance with the support of the growing line of the Marlin oscillator. But the MACD line is close (1.1042), when touched by the price it can return under the balance line. This is our scenario for today.
In the future, following our basic outline of the strengthening of the dollar, we expect the euro to decline to the Fibonacci level of 138.2% (1.0985). Price growth to the Fibonacci level of 123.6% is possible after the release above 1.1042. Even higher growth, to 1.1126, is possible only with new, no less strong fundamental news, for example, failed data on the US retail sales and industrial production next week.
On a four-hour chart, the price is higher than both indicator lines, but Marlin is in no hurry to increase, which sets the stage for a reversal divergence.
The material has been provided by InstaForex Company – www.instaforex.com