In the US session, the pair recovered from 1.1580 to 1.1616 (+36 pips) in the space of 3 hours. This rebound may have been caused by New York Fed chief William Dudley’s announcement that he will step down from his post in mid-2018. CME Group’s FedWatch tool puts the likelihood of an interest rate hike in December at 97%.
Buyers made several attempts to extend the upward correction to around 1.1635/40. Due to the drop on the euro crosses, all of these attempts failed, so my predictions for Monday didn’t come to fruition.
Buyers didn’t manage to push the price down all that far. They were held up by the 90th degree at 1.1582. This rebound has created a hammer formation on the daily timeframe. The price is now consolidating below the resistance zone of 1.1616 – 1.1620. After yesterday’s failure to induce a decline, sellers have turned a bearish picture into a bullish one. I won’t be surprised if we get a double base formation (with lows at 1.1575 and 1.1580) instead of a head and shoulders model. My forecast expects the euro to rise to the 45th degree at 1.1634. At the moment, it’s possible that the price could jump to 1.1640/50.
At 12:00 (GMT+3), ECB president Mario Draghi is set to speak. We shouldn’t expect much of a reaction here. Draghi tends to only have a strong influence on the market during the press conferences that follow ECB meetings. If sellers manage to close the day below the LB balance line, then we can start considering 1.1570 as a target for Wednesday.
Source: https://alpari.com/en/analytics/reviews ... _07112017/