EURUSD: the market stalls on a support as the euro weakens

Previous:

On Tuesday the 30^th of October, the euro closed down. Buyers tried to reverse the situation twice and both times were unsuccessful. The euro fell against the dollar to 1.1341. There were several factors which contributed to the weakening of the single currency.

1. The euro remains under pressure due to uncertainty around Italy. Italian bond yields rose this quarter against the background of weak GDP data in the country. The difference with the yields of similar German securities increased to 300 points. So far there’s no news with regard to any new budget plans.

2. US authorities are ready to introduce tariffs for the remaining imports from China by early December if new trade agreements are not reached, President Trump tweeted. US 10-year bonds shot up, and the dollar strengthened across the market.

Day’s news (GMT+3):

• 10:00 Germany: retail sales (Sep).
• 10:45 France: CPI (Oct).
• 12:00 Switzerland: ZEW Survey – expectations (Oct).
• 13:00 Eurozone: CPI (Oct), unemployment rate (Sep).
• 15:15 US: ADP employment change (Oct).
• 15:30 Canada: GDP (Aug), IPP (Sep).
• 16:45 US: Chicago Purchasing Managers’ Index (Oct).
• 17:30 US: EIA Crude Oil Stocks change (Oct 26).

Fig 1. EURUSD hourly chart

Current situations:

The reversal formation did not work. External factors turned out stronger than technical signals. The price returned to the low of the 26^th of October. At the time of writing, the euro is trading at 1.1340.

In the Asian session, the US dollar is showing mixed dynamics with regard to other major currencies. The franc and the pound are trading up, while the others are trading in the red. Today, traders’ attention will be focused on retail sales in Germany and Eurozone inflation data. If stock indexes don’t fall, then their attention will switch to the BOE meeting on Thursday and the US labor market survey slated for Friday. The market will now begin preparing for these events.

What can we expect today?

The price is on a support. Taking into account external factors and the general strengthening of the dollar in light of growing 10-year US bond yields, I expect the pair to fall to the 90th degree (1.1309) and rebound to 1.1355.

The level of 1.1365 for me is a reference point. Now, the lb is at 1.1371. If we consider the time of the rebound, then we can expect to see the price at 1.1365. If there is a breakout, then our forecast for today won’t work. The 45^th degree is at the top of the channel, which is built from lows. If they pass 1.1365 then this will serve as a target for buyers.