By the New York close markets had recorded a classic risk-off day: the S&P 500 down, bond prices up, oil down, US dollar up. EURUSD was no exception, and the key reversal on the monthly chart for June is still operative.
Markets are pricing a 0% chance of a rate hike by the Federal Open Market Committee at next week’s meeting; 5% by September and 10% by the end of the year. However, those odds are sure to change, one way or the other, after the US jobs report is released at 0830 EST.
Ahead of then there is no significant data out of the US or Eurozone so the direction of EURUSD will be determined by whether the risk-off mood gathers momentum. Today’s FOMC minutes cover the pre-Brexit meeting mid June so are unlikely to have much impact on sentiment.
Management and risk description
From an Elliott Wave perspective, the euro’s recovery from its “Brexit day” low of 1.0910 appears merely corrective in its wave structure, arguing for new lows ahead. Resistance now lies around the 1.1100 level and at 1.1130/1.1155 max. for selloff toward 1.0975 en route to 1.0910 and then the 1.0825/1.0800 area (see daily chart below).
Entry: EURUSD is seen as a sell today at 1.1097 and at 1.1124, if seen.
Stop: 1.1161, initially.
Target: 50% at 1.0926 and 50% at 1.0833.
Time horizon: allow several days for targets to be met.
EURUSD daily chart (click to expand)
EURUSD weekly chart (click to expand)
Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more
— Edited by Gayle Bryant