As I was expecting yesterday, the volatility rose around US publications. The release of the ADP did not surprise the market since it came around expectations, but triggered optimism in what concerns the NFP release from Friday. The surprise of the day came with the release of the Factory Orders. I was pretty sceptic in what concerns this release, but it surprised me as well as the market. The US Factory orders registered 1.6% rise.
These two releases have triggered dollar buying. The EURUSD dropped all the way to 1.3750. The down move was also sustain by the risk aversion triggered by the bomb explosion from the Cairo University.
See yesterday analysis: EUR/USD Forecast And Price Action for April 2nd;
Today from the Euro Area were released the Spanish Services PMI in line with expectations 54.0; Italian Services PMI below expectations and below 50.0 level (49.5) and the EU Retail Services up 0.4%. These did not have a great impact on the EURUSD quotation. The price was held between 1.3750 and 1.3770. Continue this article to see what the main events for today are and what the price action is telling traders
The following are expected next:
EU – Minimum Bid Rate (12:45). In the economic calendar the interest rate it is expected to remain at 0.25%. 57 of 60 Bloomberg analysts are expecting ECB to maintain the interest rate at current level and only 3 of them are expecting a diminish. For the moment I am also with maintaining it.
EU – ECB Press Conference (13:30). We are accustomed with the ECB to hold their monetary policy press conference in the first Thursday of the month. Even if I am no expecting a rate cut, I believe that Mario Draghi will say something regarding other types of monetary easing. The ECB is carefully watching the price stability and looking for raising the inflation. If this will happen then I believe that we will see an important drop for the Euro, if not, then 1.3800 would be broke again.
US – Trade Balance (13:30). The US trade balance is expected to be published -38.3B for this month. Even though it is marked as a high impact indicator it usually doesn’t trigger high volatility.
US – Unemployment Claims (13:30). For the past 4 weeks this US labor market indicator was published below its expectations. For this week it is expected to be around 319K. If it will be in line with expectations or below will help the dollar strengthen.
EU – ECB President Draghi Speaks (15:00). Mario Draghi it is expected to speak again after the press conference at the award ceremony of the Generation Euro Competition, in Frankfurt.
US – ISM Non-Manufacturing PMI (15:00). Released by the Institute for Supply Management, the Non-Manufacturing PMI is one of the most important leading indicators from the US economy. In March it was below estimates but above 50 level. In April it is expected to be around 53.5. If it will be lower or higher than this value the EURUSD will react.
All hours are GMT.
It is clear that this will be an important day for the EURUSD evolution. In the second part of the day I am expecting a raise in the volatility. I also am expecting a continuation in the Euro drop. If it will not happen today then we might see the Euro higher than the ECB desires.
EUR/USD – Price Action
The Euro has dropped yesterday all the way to 1.3750. Here it has retested the upper line of the Falling Wedge I talked in my past analysis. The price has moved sideways in the first part of the day, between 1.3750 and 1.3770. A break above the local resistance could trigger another rally which might target 1.3800, while a drop below the local support might tell us that the US dollar is bought. For a drop I would look at the following support levels: 1.3740, 1.3720 and 1.3700.