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EUR/USD Forecast Update 29 Oct 19

The EUR/USD is giving mixed signals across the various time frames since the start of the week.

Technical Analysis

On the 15 minutes chart, it is testing the immediate support of 1.11. This is a new bullish recovery.

On the hourly chart, the EUR/USD is testing the immediate support of 1.11. We can see that the currency pair faces some interaction at this region. It is important to note the presence of the middle bollinger band which may provide some resistive pressure.

On the 4 hourly chart, the test of the 1.11 support remains valid. However we can see the bigger picture where other strong influences exist. One example is the region of 1.1125.

It is important to note the presence of the middle bollinger band which may provide some resistive pressure. Furthermore in this time frame a bearish channel from last week remains valid.

Looking at the daily chart, the EUR/USD is on a bearish trend. We observe a support of sorts near the region of 1.1075. With the middle bollinger back coming up below, we may see it play the role of an immediate support.

Fundamental and Sentimental Considerations

Brexit developments continue to remain uncertain. UK PM Boris Johnson accepted the EU’s offer of an extension until January 31. With indications pointing to a likely upcoming general elections, the path ahead remains fluid. This uncertainty is probably exerting a drag on the euro currency.

There is increasing talk of how a trade deal can bring timely benefits to both the US and China economies. If developments turn out positive, we may see an increase in risk appetite and a possible shift of demand away from the US dollar.

Up Ahead

The US CB Consumer Confidence is up next. Consumer surveys are influential as the sentiment of consumers is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well and hence consumers are confident. This likely leads to increased retail sales. A cautious sentiment on the other hand may see consumers spend less in view of a perceived upcoming economic crisis. If an unexpected result emerges, we may see volatility that may lead to a price momentum.

Besides speeches by various officials, the following listed below will be upcoming and it includes the major economic event US Non-Farm Payroll.

EUR German Prelim CPI
Consumer Price Index is important because the price of consumer goods is a significant component of inflation. If inflation is high, a central bank may increase interest rate to mitigate the situation. Speculations of a possible interest rate hike may generate demand for the currency.

USA ADP Non-Farm Employment Change
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.
ADP’s statistics is based on the payroll data of approximately 400,000 U.S. business clients. Therefore it is viewed by many as a possible early indication of the US Non-Farm Payroll result.

USA Advance GDP
USA Advance GDP Price Index
Gross domestic product is a measure of the monetary market value of all the goods and services produced. It is an overall measure of economic activity and health and thus wields influence on the home currency.

USA FOMC Statement
Interest rate related statements are given much attention by analysts and investors as it has a direct impact on the currency. Investors usually favor a currency with a higher interest rate and will analyse these statements thoroughly for insights on the interest rate policy.

USA Federal Funds 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.

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

EUR Spanish Flash GDP
Gross domestic product is a measure of the monetary market value of all the goods and services produced. It is an overall measure of economic activity and health and thus wields influence on the home currency.

EUR CPI Flash Estimate
Consumer Price Index is important because the price of consumer goods is a significant component of inflation. If inflation is high, a central bank may increase interest rate to mitigate the situation. Speculations of a possible interest rate hike may generate demand for the currency.

USA Personal Spending
While Personal Spending is similar to Retail Sales, it focuses on consumers. It is a fundamental component of the economy because as consumers spend, it translates to revenue and flows up stream as salaries, wholesales purchase, production orders and so on.

USA Core PCE Price Index
While the Personal Consumption Expenditures index is similar to Consumer Price Index, it focuses on individuals. It is a component of inflation and if inflation is high, a central bank may increase interest rate to mitigate the situation.

USA Employment Cost Index
Employment cost is a leading indicator of inflation. If cost rises, the increase is reflected downstream in the price of production and products. If inflation is high, a central bank may increase interest rate to mitigate the situation.

USA Chicago PMI
USA ISM 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.

USA Average Hourly Earnings
Consumer earnings is important due to it’s upstream impact. With more earnings comes possible increased consumer spending. This translates to revenues, leading to employment and business expansion.

USA Non-Farm Employment Change
USA Unemployment Rate
The US Non-Farm Payroll is basically data released by the U.S. Bureau of Labor Statistics on a monthly basis that represents the total number of employed US workers, excluding the following employees:
– general government employees
– private household employees
– employees of nonprofit organizations which provide assistance to individuals
– farm employees
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.

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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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