Forex: EUR/USD holding to rising channel so far today

EU Economic Forecast due out

Forex: EUR/USD holding to rising channel so far today Tuesday, November 5th:_ The EUR/USD yesterday opened at 1.3490 but the US dollar rose sharply after comments from Dallas Fed president Richard Fisher. He told a conference of business economists in Sydney, Australia that the US central bank should stop its record stimulus as soon as possible. Fisher also stressed that corporate balance sheets in the US were stronger than ever and added that any withdrawal of financial incentives from the Federal Reserve should depend entirely on economic data.

Following Fisher’s remarks the EUR/USD dropped to a low of 1.3440, testing the lower line of the ascending channel within which the price has been trading since 10 July and the rising 89-day simple moving average. Subsequently the pair rebounded to close at 1.3514, gaining 0.24 percent.

Yesterday’s price action formed a hammer candlestick pattern on the daily chart, which is a strongly bullish sign. The presence of this candle right above a trendline suggests that the price should continue to move within the channel. This prognosis is supported by the daily stochastic oscillator, which crossed above its signal line.

In today’s trading so far, the pair has been confined between 1.3521 and 1.3489 and is currently to be seen around the psychological 1.3500 level.

Spanish October Unemployment Change is due out at 08.00 UTC today and is expected to show a rise of 31,300.

The European Union Economic Forecast for the next two years is due out at 10.00 UTC along with the Eurozone’s Producer Price Index m/m for September (expected to rise by 0.3 percent).

ISM’s US Non-Manufacturing Purchasing Managers Index for October is due out at 15.00 UTC. Analysts expect a slight decline from the prior 54.4 points. The IBD/TIPP Economic Optimism comes out at the same time and is forecast to rise to 41.1 points for this month from the prior 38.4.

Today’s resistances: 1.3525, 1.3555 and 1.3585.

Supports: 1.3490, 1.3475 and 1.3415.

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