EUR/USD: The time for a significant correction

 

 The change in the volume of orders in the US for durable goods is regarded by market participants as a leading indicator of investment activity. Today, a positive figure is expected. The growth of the indicator is expected to be within one percent. If the market receives a figure much worse than expected, then such a development of events may be taken advantage of by market players to reduce the value of the US dollar against other major currencies. Under such a scenario, the dollar index will decrease by a few tenths of a percent. Significant downward movement on the dollar index should therefore not be expected in such a situation.

Chart: tradingeconomics.com

The head of the Bank of Canada, Stephen Poloz, is set to deliver another speech. In it, he will express his views on monetary policy, and assess the current state of the economy. If market participants do not hear a confirmation of Poloz's "hawkish" outlook of the monetary policy, then the fall of the Canadian dollar will continue at a more accelerated pace, and if the previous tough stance on monetary policy is confirmed, the Canadian dollar is unlikely to undergo significant strengthening due to the fact that market participants in many ways have already priced in such a development of events into the USD/CAD currency pair.

In the review of September 20, the following idea was voiced: "A good level for buying in case of a sure exit of EUR from the local trading channel drawn on the chart will be a price close to 1.17." The time has come for a decision to enter a long position on the EUR/USD pair.

Of course, it's not as simple ...

After the elections in Germany, the participants of the market began to fear for the political stability of the largest economy of the eurozone, and coupled with creeping doubts that the ECB in the near future will make a statement that can be interpreted by market participants as a signal to tighten its monetary policy, at that very moment, it became clear to market participants that the time had come for a significant correction in the EUR / USD pair.

In turn, the Fed added confidence in another rate hike this year, which has also strengthened the corrective sentiment in the EUR / USD pair.

All these facts are worth considering, but the markets are arranged in such a way that if there is time for correction, then the market will find one way or another to carry out what has been conceived. We wish you profitable trading!

 


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