Yesterday’s Trading:

A fall in the oil and stock indices has facilitated a fall in the dollar/yen to 114.20 and a rise of gold to $1,200 per troy ounce. The euro has strengthened against the dollar to 1.1215. The rate rose to 1.1237 in Asia.

The markets are closed for a week in China. Falling oil prices as more reserve reports are set to come out is putting pressure on the stock markets and bonds. The market is in a turbulent zone. The Nikkei 225 has fallen 5% this morning.

Main news of the day (EET):

Market Expectations:

The calendar is empty today. Trader attention is on Janet Yellen who is set to speak tomorrow and Thursday (17:00 EET). If she signals that the Fed is to wait and see whether to put up rates this year and not be neutral, the euro/dollar will shoot up. If the Fed chief is neutral, the market will sit in a sideways with sharp fluctuations up and down.

Technical Analysis:

A complex wave structure has formed on the hourly period above 1.10. The resistance zone passes through 1.1238-1.1244. If we take a look at the channel, we may have a price blowout to 1.1258.

The euro/pound has bounced from the D3 and formed a pinbar. If the European indices don’t fall following the Nikkei 225, a downward correction will begin. The correction on the euro/pound will cause a downward movement on the euro/dollar. Volatility is high so the price could quickly head down to 1.1168 and then return back. So could the euro weaken against the dollar to 1.11? It could we do. Keep an eye on the stock indices and oil.

Source: alpari.com, “Euro/Dollar Expected Fall to 1.1168/70 in First Half of Day”