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Activity in the market increased yesterday despite the lack of any fundamentals whatsoever. The euro was bearish during the European session amid the general strengthening of the dollar. However, after the opening of the North American session, the currency immediately went up. In fact, the rise came for no reason. Durable goods orders increased by 0.4%, in line with the market forecast. It could be interpreted as a positive sign for the greenback, as it indicates continuing growth of consumer spending, the main driving force for any economy. In other words, these data should have boosted the dollar, not the euro. The FOMC Minutes published yesterday confirmed the Fed's plan to lift the interest rate by 50 basis points at the next two meetings. Thus, from the fundamental point of view, the euro rallied unexpectedly. Amid the lack of fundamentals, the technical picture comes to light. It may well provide a reasonable explanation of the strange behavior of the euro.
United States Durable Goods Orders:
Technical factors are likely to be the driving force for the market today given that the macroeconomic calendar contains only the weekly jobless claims report. In fact, mixed results are expected, with initial claims rising by 3,000 and continuing ones falling by 7,000. Since one reading should be offset by the other, there would be no point in focusing on the data.
United States Continuing Jobless Claims:
EUR/USD pulled back to support at 1.0636, and the volume of short positions decreased.
The RSI left the overbought zone on the H4 chart as a result of the pullback. On the daily chart, however, the indicator crossed line 50 from top to bottom, signaling a slowdown of the downtrend.
The MAs of the Alligator indicator are moving up on the H4 chart, showing a continuation of the corrective move. On the daily chart, there is a crossover of the Alligator's MAs, which could indicate an extension of the corrective move.
Outlook:
In spite of a rebound from 1.0636, there has been no signal to buy the euro so far. Should the quote settle above 1.0750, the volume of long positions would increase. This, in turn, would mean a continuation of the correction.
Until then, the pair is likely to hover around support.
In terms of complex indicator analysis, because of the corrective move, there is a signal to buy in the short term and intraday. In the medium term, there is a signal to sell the pair amid the general trend.
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