Daily Forex Market Preview, 21/11/2017
The Euro turned weaker on Monday’s open after late Sunday coalition talks between Merkel’s CSU/CDU and other parties broke down. The uncertainty led to the possibility of snap elections which weighed on the common currency. However, the declines in the euro were seen to be limited. The weakness in the euro managed to send the U.S. dollar to close higher on the day.
The ECB President, Mario Draghi was also seen speaking yesterday. In his testimony to the European Parliament, Draghi defended the ECB’s monetary policy actions. He stated that the Euro area economy still required some stimulus in order to recover from the economic slowdown and for inflation to rise.
Looking ahead, the economic calendar today will see the release of the UK’s inflation report hearings. In the U.S. the existing home sales data is expected to show an increase of 5.42 million. The Fed Chair, Janet Yellen will be speaking later in the evening.
EURUSD (1.1737): The euro extended declines yesterday, mostly on account of the uncertainty surrounding the German political developments. Price action shows that EURUSD is likely to extend the declines down to 1.1704 level of support seen on the daily chart. This marks the retest of the breakout from the falling wedge pattern from where price previously broke out from. However, further declines can be expected only on a strong close below this support level. With the trend line offering dynamic support and the horizontal support level confluence, the declines could be limited. EURUSD is most likely to maintain a sideways range as a result. On the 4-hour chart, the hidden bullish divergence that is developing adds weight to the limited downside in price.
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