During the press conference, Draghi said that the ECB had upgraded their economic forecasts for GDP and inflation growth. Projected GDP growth in 2018 has been revised upwards from 1.8% to 2.3%, while projected inflation has been revised from 1.2% to 1.4%. Draghi added that if the conditions for economic growth get any worse, the ECB would expand its asset purchasing program. The US dollar rose against most of the majors after positive statistics on employment and retail sales. The number of initial jobless claims last week fell by 11,000 to 225,000. The retail sales index grew by 0.8% against a forecast of 0.3% and a previous reading of 0.5% (revised from 0.2%). Yesterday, I wrote that technical analysis doesn’t work when the heads of central banks a speaking or when large blocks of economic data are released. Yes, the price does take all events into account, but only post factum. Market expectations often diverge from the actual outcome. The past is a static picture. It doesn’t change under any circumstances. In basics of forex market, We can analyse a price’s historical behaviour, and simulate different scenarios, but the future can be shaped by us as fundamental data and statements from officials change market expectations. The W-model is off the cards. If the euro starts to rise again, we could see the formation of an upwards impulse towards the TR2 trend line. For that to happen, the euro needs to move from its current level and rise above the 45th degree, which is at 1.1819. At the time of writing, the euro is trading at 1.1784. This is close to the LB balance line. The price is in equilibrium on the hourly timeframe. My forecast has the euro dropping to the lower boundary of the A-A channel. The stochastic has reversed downwards, so I’m expecting the euro to open down in Europe.
