The euro gained 49 pips at the end of Monday. In regards to the opening price, the small gap remains open, which suggests that the pair will stop rising soon, and will settle below 1.0692, or the gap could close without the pair consolidating below the nearest support and will continue to rise to the target range of 1.0834/65.
Other scenarios are also possible, and it will depend on tomorrow’s data, primarily inflation figures for the United States. The core August CPI is estimated to drop from 4.7% YoY to 4.3% YoY, while the CPI is expected to increase from 3.2% YoY to 3.6% YoY. In the eurozone, industrial output is seen to contract by 0.7% in July.
In general, unless the euro consolidates below the level of 1.0692, we will stick to the main scenario of a deep correction to the 1.0931 area, below which is the MACD indicator line.
The 4-hour chart shows the price’s intention to close the gap. The MACD line has already been tested, and a reversal may start from it. In this situation, even if the price consolidates above 1.0774, this doesn’t mean that it will start an uptrend, unless a daily candlestick confirms it. However, the euro may not be able to achieve this in just a day. Overall, the situation suggests that the pair will trade in either way in anticipation of tomorrow’s US data.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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