EUR/USD yesterday closed with a large bearish engulfing bar followed by a shooting star off a major resistance on daily chart that shows significant signs of weakness.
At the moment of writing in Asian session, the pair is being traded at 1.3618 where it looks all set for a dive towards 1.3523 (61.8% fib level) and then 1.3435. Have a look at following daily chart;
After printing Lower Low (LL) and Lower High (LH), the pair is poised for more downside movement. We have two possibilities; first the pair may print a low up to 1.3523 in current wave and then rebound to print another Lower High (LH), or we can see a deeper correction up to 1.3435 during the course of ongoing wave. The later scenario seems more likely because the position of recent Lower High (LH) shows some real weakness.
It is pertinent that we have too many fundamental events due today in Eurozone basket that include;
- Germany’s Consumer Price Index (CPI) MoM & YoY for December
- Germany’s Harmonised Index of Consumer Prices MoM & YoY for December
- Monthly report to be released by European Central Bank (ECB)
- Eurozone inflation report (YoY) for the month of December
Then in the US session some other important economic reports about American economy are scheduled, those include;
- US Inflation report for the month of December YoY & MoM
- Initial Jobless Claims (Jan 10)
- Fed outgoing chairman Bernanke’s speech
The speech by Fed president would be of great significance. Minutes from Federal Open Market Committee (FOMC) December meeting indicated some real hawkish mood in policy makers. Many economists believe that the Federal Reserve is seriously considering back to back trimming in monthly bond-buying program that will ultimately end QE in October this year amid big fall in jobless rate and better than forecast growth in economy.
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