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Technical Analysis for 07/11/2016

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Technical Analysis for 07/11/2016

Technical Analysis for 07/11/2016
November 07
09:00 2016

EUR / USD – EURO US DOLLAR

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On Friday, during the Asian-European session the dollar slightly strengthened after the report of the US Department of Labor showed that 161 thousand of new jobs had been created in October. The September figure was revised up by 35 thousand of working places and the average wage accelerated the growth to 2.8% per annum (against the forecast of 2.6%). This strengthened the expectations that the US Federal Reserve would raise interest rates next month. However, the market reaction to the report was short-lived, as a high probability of a rate hike (78%) had been already incorporated in the US dollar exchange rate. Against this background, the euro \ dollar only marked the decline and having tested the daily low at around 1.1080, it turned to a new rise of the pair. Taking into consideration that these days all the attention of the investors has focused on the elections of the American president, the price dynamics of the pair remained fairly moderate. In anticipation of the weekend quotes failed to activate the movement and at the end of the day the quotes of the European currency recorded a closure near the previous high at the price level of 1.1140.

In our forecast for Monday we expect a short-term rollback of the pair, and then the resumption of the growth of the single European currency against the target levels: 1.1140; 1.1175 and, possibly, to 1.12.

GBP / USD – BRITISH POUND DOLLAR

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After the rapid growth during the bidding process on Friday, the pound / dollar has settled near the previously reached high of 1.2494 and, despite the complete lack of the support from the meager economic calendar, it was eager to gain a foothold on the current position. The mass closure of deals to sell the pound has become the driver of the British currency growth. This happened after a report that the High Court of Justice obliged the Government of the United Kingdom to obtain a parliamentary consent in order to the use Article 50 of the Lisbon Treaty and begin the EU exit procedure. Thus, the probability of complex Brexit has been reduced because the Government may not be able to receive the approval of Parliament by March 2017 (the start of the EU exit  procedure). The weakening of the dollar against the background of a possible rise to power of the US Republican Donald Trump has become another driver of the British currency growth. As a result, a change of sentiment in the market has allowed quotes to continue the restoration of the pair regarding the pound and push the pound to a new 4 – week high of 1.2557, and then, complete the weekly trade with the corrective rollback to the key level of the support-1.25.

In our today’s forecast we suppose that there will be an attempt of the pair pound / dollar to test the previous local maximum of 1.2557. We expect a reversal of the British currency near this level, and the resumption of the corrective decline towards the following targets: 1.25; 1.2440; 1.2406 and 1.2355.

 

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