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On Tuesday, trading on our currency pair closed slightly up. The daily candlestick has a bullish body of 6 pips, and a long upper shadow of 67 pips. In the first half of the day, buyers received a boost from Yves Mersch’s speech and the IFO report, which showed an increase in business activity in Germany for July. The pair hit a new one-year high thanks to a weakening of the dollar across the market and the activation of protective stop levels above 1.1685.
At 1.1712, buyers clearly met with some sell orders on the euro, which provoked a lot of traders to take profit on their long positions. By the end of the session, the euro had dropped to 1.1642.
ECB member Ewald Novotny’s speech, as well as US data, helped the dollar recover some of its losses. Novotny said that there’s no need to set a timeframe for completing bond purchases. Consumer confidence in the US came out higher than expected.
Day’s news (GMT+3):
EUR/USD rate on the hourly. Source: TradingView
I allowed for the price to return to 1.1684 and was sure that sellers would defend that level until the Fed’s statement on monetary policy. Growth stopped at the 67th degree. Judging by the ricochet that took place at 1.1712, buyers must have met with some tempting offers. They provoked them to close their long positions, which had been opened above the 1.1685 resistance. This produced a nice trading volume for the time of day. When the euro bulls understood that they didn’t have the strength to grow further, they started cashing in on their positions, which triggered a drop in the rate to 1.1642 (-70 pips).
