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EUR/USD Forecast Update 22 Oct 19

The EUR/USD has been on a bearish momentum since the start of the week.

Technical Analysis

On the 15 minutes chart, it is testing the immediate support of 1.125. It has a bearish momentum.

On the hourly chart, the EUR/USD is testing the immediate support of 1.1125. We note that the current region is rather influential on price action. This is clearly seen on 17 / 18 Oct 19. The currency pair has a bearish momentum on this time frame.

On the 4 hourly chart, the test of the 1.125 support remains valid. The current price action is forming a peak from the high of 1.1160s. The momentum is turning bearish.

Looking at the daily chart, the EUR/USD has fallen within the upper bollinger band. It is too early to tell if a continuation of the long term bearish trend is happening.

Fundamental and Sentimental Considerations

Brexit developments remain uncertain as the UK PM Boris Johnson attempts to rally support from MPs to back his Brexit deal. This is done so that the UK can leave the EU in 9 days’ time. We are likely to see influences on the EUR/USD as things move along.

US President Donald Trump mentioned on Monday that the progress of the US China trade agreement was doing well. Having said so, reports came out later that China is looking at retaliatory sanctions of $2.4 billion against the United States for not complying with a World Trade Organization ruling on US tariffs on Chinese steel cylinders, solar panels and wind towers.

This may impact the negotiation process and close monitoring needs to be done to gauge the sentiment of the market.

Up Ahead

It has been quiet so far but things are about to change as important economic data releases and events are expected ahead.

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.

EUR Spanish Unemployment Rate
Employment is a fundamental component of the economy as it leads to consumer spending and hence retail sales. A low unemployment rate is an indicator of a healthy functioning economy.

EUR French Flash Services PMI
EUR French Flash Manufacturing PMI
EUR German Flash Manufacturing PMI
EUR German Flash Services PMI
EUR Flash Manufacturing PMI
EUR Flash Services PMI

Purchasing Managers’ Index is a survey of purchasing managers and is important as the sentiment of purchasing managers 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.

EUR Main Refinancing Rate
A high interest usually generates demand while a low interest may result in the dumping of the currency for better yielding alternatives. Therefore the interest rate result usually has a significant impact, especially when it is an unexpected result.

EUR Monetary Policy Statement
Monetary policy meeting statements are given much attention by analysts and investors as it has an impact on the economy. The minutes will be analysed thoroughly for insights on the economic policy ahead. Significant volatility may be generated if there are unexpected revelations.

EUR ECB Press Conference
Press conferences may go into unscripted territory during the Question and Answer segment and hence may spur unexpected developments and volatility.

USA Core Durable Goods Orders
USA Durable Goods Orders

Reports on the orders of goods are leading indicators of production and thus the level of economic activities. Increasing purchase orders suggests that manufacturers will increase activity to meet the demand, providing downstream benefits such as employment. On the other hand, decreasing orders may indicate an upcoming economic crunch.

USA Flash Manufacturing PMI
Purchasing Managers’ Index is a survey of purchasing managers and is important as the sentiment of purchasing managers 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.

EUR German Ifo Business Climate
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.

There are many more events and hence it is important to follow an economic calendar. By doing so, you can reduce the possibility of an unexpected development affecting your trading plan.

Members can log in to their dashboards for an economic calendar. The latest premium analysis and Price Action Bias Signals are now available too.

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Traders should always practice proper money management and seek to understand the underlying tones for the market.

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