Previous:

On Wednesday the 17th of January, trading on the euro/dollar pair closed down. The euro dropped against the dollar from 1.2323 to 1.2177. This decline was catalysed by a jump in US 10Y bond yields as well as an upwards correction on the dollar. US bonds jumped from 2.53% to 2.58%.

Statements from two ECB officials put some downwards pressure on the euro. Both Villeory and Constâncio voiced concerns over the euro's rally, saying that it's a source of uncertainty given that this movement goes against the fundamentals. Constâncio added that the ECB's monetary policy could remain loose for the long term.

The upswing to 1.2288 was brought about by the Bank of Canada. The central bank increased its key rate by 25 base points to 1.25%. Governor Steven Poloz said that the banks decisions depend on current economic decisions. After this news, the euro slipped to 1.2165 (-123 pips).

Day's news (GMT+3):

Fig 1. EURUSD hourly chart. Source: TradingView

So, what can we expect today?

Hourly cycles are signalling a continued decline for the euro. The daily candlestick for 17/01/18 is also suggestive of a declining euro. Moreover, it has both a long body and wick. The euro's decline stopped at the 90th degree despite the reversal zone being between the 112th and 135th degrees.