The Euro dropped heavily against the US dollar yesterday during the late NY session. The pair is approaching a critical support area at around 1.3800 level, which has acted as a support numerous times. So, I think buying around the mentioned support zone with a tight stop is a good idea in the short term.
Looking at the hourly, there is a potential bullish divergence forming, which can cause a bounce in the pair. So, if the pair moves a bit lower closer to the 1.3800/1.3780 support level, stops and forms a bullish divergence, then we can enter a buy trade in EURUSD. Remember, the pair needs to hold the mentioned support level in order for this trade to be valid.
Initial target should be around the 1.3880 level, and final target could be around the last high. Stop should be placed below the 1.3760 level.
Reviewing yesterday’s events and trades
Yesterday, in the European session, the UK GDP data was published, which missed the expectation. As a result, the GBPUSD dived down from the intraday high of 1.6850. Later, during the NY session, the CB consumer confidence was published, which also missed the expectation to register a decline from 83.9 to 82.3. Overall, the US dollar was seen trading higher against the major counterparts, especially against the Euro, which traded lower towards the 1.3800 level yesterday.
Fundamental Outlook for the day
Today, is an important day, as a lot of economic releases are scheduled for the release later during NY’s session, including the US GDP and Fed interest rate decision. These events can create a lot of volatility in the market, as the Fed is expected to reduce QE3 purchases by another $10B. If they deliver according to the expectation, then the US dollar can gain a lot of ground, else it might dive post release. So, keep a close eye on these events to avoid a losing position.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: GBPUSD, USDCAD, EURGBP, NZDUSD, AUDUSD and EURAUD.
Get it HERE: Vladimir’s Markets Forecast
Trade safe friends. Happy trading!
