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EUR/USD Forecast Update 16 Oct 19

The EUR/USD has been ranging for the week.

Technical Analysis

On the 15 minutes chart, it is testing the immediate support of 1.1020. It has a neutral trend.

On the hourly chart, the EUR/USD is testing the immediate support of 1.1020 which we observe to be a rather influential support region for the past few days. It has a neutral trend.

Things get a little interesting on the 4 hourly chart. While the test of the 1.1020 support remains valid, the overall trend is bullish.

Looking at the daily chart, the EUR/USD is capped on the upside by the upper bollinger band. It is visible that the currency pair is ranging in the longer time frame.

Fundamental and Sentimental Considerations

Brexit negotiations continue with no clear indication of a resolution. An EU official was reported to have commented that important matters remained undecided.

This situation is likely to exert some drag on the euro currency.

While the German ZEW Economic Sentiment came in better than expected at -22.8 instead of -27, it remained negative. As a survey of analysts, this sentiment report holds a weight. Their sentiments may be derived from their working knowledge of the economy and hence may be an early indicator of economic health.

The US Retail Sales was released moments ago and is worse than expected. It came in at -0.3% instead of 0.3%. As an important measurement of the economy, this may inject volatility into the price action.

This doesn’t reflect well on the US economy and speculations of more interest rate cuts may increase.

Up Ahead

There are more important economic data releases to be expected.

USA Philly Fed Manufacturing Index

Business Climate surveys are influential as the sentiment of businesses is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well while a cautious sentiment may see less business activities due to prudence.

USA Building Permits

The construction of a building generates many economic activities. Jobs will be created for construction workers, the various sub contractors and services associated with new buildings such as power, water, furniture and so on.

USA Industrial Production

Industrial production serves as a leading indicator of economic activity. If production is high, it suggests that economic activity is high. This may indicate a functioning economic climate.

USA Crude Oil Inventories

Movement of oil supply may bring insights to the level of general economic activities. For example, an increasing supply may suggest excessive production or diminishing demand. A reducing supply on the other hand may suggest an economic pick up.

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