Euro hovering above bottom line of the channel

22 January, 2020

On Tuesday, January 21, the euro was down at close. By the end of trading, the euro lost all the profits it had gained from the release of favourable European data. A sharp reversal could be caused by increased demand for defensive assets and a general decline in global stock indexes.

Indexes fell on the back of the news concerning the discovery of a new deadly virus in China, from which nine people have already died. According to the latest data from 13 Chinese provinces, 440 cases of viral infection have been detected. Cases have also been identified in South Korea, Thailand, Japan and the United States.

The current situation has made investors recall the years 2002-2003, when a pandemic killed almost 800 people. According to WHO, the number of victims of the Ebola virus amounted to more than 21,086, with several thousand people dying as a result of the infection. We do not remember markets reacting like this to viruses. There can only be one answer here, someone wants to receive a large order for the creation of a vaccine.


Today’s events (GMT+3):

  • 12:30 UK: Public Sector Net Borrowing (Dec).
  • 13:00 UK: CBI Industrial Trends Survey - Orders (MoM) (Jan).
  • 16:30 Canada: BoC Consumer Price Index Core (YoY) (Dec).
  • 17:00 USA: Housing Price Index (MoM) (Nov).
  • 18:00 Canada: BoC Interest Rate Decision, Bank of Canada Monetary Policy Report.
  • 18:00 USA: Existing Home Sales (MoM) (Dec)
  • 19:15 Canada: BoC Press Conference.

Yesterday, bulls did not reach the calculated target - the ambient background being a stronger reason than technical factors. At the time of writing, the euro is worth 1.1077. Bears have been strengthening their position since the Asian session. Today we have one scenario – a price recovery to the balance line (lB is now at 1.1092). If the price leaves the channel, then the 1.1066 level (at the 90th degree) should be kept as a target. We believe this price model to be unsuccessful for the continuation of the fall of the EURUSD pair.


Source  
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