Euro Is Ready to Get Back to Rising

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Last week, the USD was having a tough time against the Euro. Perhaps, it was one of the worst weeks lately, with both controversial statistics and complications in Brexit talks between the UK and the EU being a reason for that.

The statistics published by the USA showed that the Retail Sales m/m lost 0.3% m/m, which is the first time the indicator dropped over the previous seven months. The key contribution to the decline was made by lower sales of motor vehicles, building material, hobbies, and online purchases, which is another signal of not very pleasant processes in the US economy: the country reported on the decline in the Capacity Utilization Rate.

Restraints in Brexit talks, which is currently going into a skid again, may prevent the European currency from rising and help the USD to recover a little bit. The Brexit deal will reduce risks of recession in Europe, so every good piece of news from this area provides a lot of support to the Euro.

Numbers from Europe, in their turn, were rather mixed. For example, the Industrial Production showed +0.4% m/m in August after losing the same in the previous month and against market expectations of +0.3% m/m. it’s a good signal. However, the final revision of the CPI for September was 0.8% y/y, which is worse than 0.9% y/y the month before. The Core CPI remained unchanged at 1.0% y/y. Slight deterioration of inflation may indicate problems with private consumption.

EUR/USD technically

EUR/USD, H4
EUR/USD, H4

As we can see in the H4 chart, EUR/USD has completed the ascending wave, which may be considered as a correction of the previous descending wave; right now, it is forming the first descending impulse. Possibly, the pair may reach 1.1137 and then grow towards 1.1155, thus forming a new consolidation range between these two levels. If later the price breaks this range to the upside, the instrument may expand the range towards 1.1172; if the to the downside – resume trading downwards with the target at 1.1070. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving high above 0. According to the main scenario, the line is expected to fall towards 0. Breakout of this level to the downside will boost the downtrend.

EUR/USD, H1
EUR/USD, H1

In the H1 chart, EUR/USD is forming the descending impulse towards 1.1137, which may later be followed by a new correction to reach 1.1154, thus forming another consolidation range. Possibly, the pair may expand the range towards 1.1172 and then resume falling to reach 1.1122. if later the price breaks this range to the downside, the instrument may form a new descending wave with the first target at 1.1070. From the technical point of view, this scenario is confirmed by Stochastic Oscillator: its signal line is consolidating around 50. If later the range is broken to the upside, the line may grow towards 80; if to the downside – resume falling to reach 20.

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