EUR/USD Price Forecast – Euro Continues to Reach Towards Trendline

The Euro has rallied significantly during the trading session on Tuesday, reaching just above the 1.18 level by the time New York got on board. The question now probably focuses on whether or not there is going to be stimulus coming out of the US, because Nancy Pelosi suggested that Tuesday was the “deadline” to get anything done between now and the election. My suspicion is they will find a way to cause some type of issue, as politicians in the United States continue to become more childless each day. However, the market seem to cling on to some kind of hope so that is something worth paying attention to.

EUR/USD Video 21.10.20

There is the possibility that we get a “sell the news” type of event when it comes to stimulus, meaning that the markets may do exactly opposite of what you expect. After all, we have been pricing in the idea of stimulus for so long that perhaps people will start to take profit. While that is not my base case scenario, it is something worth paying attention to. To the downside, I believe that the 1.17 level will probably continue to be crucial, and therefore if we were to break down below there it opens up the possibility of a move down to the 1.16 handle.

To the upside, I see the 1.1850 level as offering resistance, just as the 1.19 level is above there, and of course the 1.20 level which has been a massive amount of noise. If we can break above the 1.20 level, then the Euro can continue a longer-term move to the upside, but we are clearly quite a way from having that happen right now.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Mid-Session Technical Analysis for October 20, 2020

The Euro is trading higher against the U.S. Dollar on Tuesday ahead of a deadline for a new fiscal stimulus deal from Washington.

Optimism is being fueled as House Speaker Nancy Pelosi and Treasury Steven Mnuchin “continued to narrow their differences” in a Monday afternoon phone call to discuss another stimulus package, according to Pelosi spokesman Drew Hammill.

At 12:38 GMT, the EUR/USD is trading 1.1807, up 0.0036 or +0.30%.

Despite the early strength, fading hopes for a U.S. coronavirus aid package and weaker demand for risky assets worldwide, with rising coronavirus infections in Europe are likely to continue to limit gains in the single currency.

Daily EUR/USD

 Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1831 changes the main trend to up. A move through 1.1688 will signal a resumption of the downtrend.

The minor range is 1.1831 to 1.1688. Its 50% level at 1.1760 is new support.

The main retracement zone support is the 50% level at 1.1691.

The short-term range is 1.2011 to 1.1612. Its retracement zone at 1.1811 to 1.1859 is potential resistance. The lower or 50% level of this zone at 1.1811 is currently being tested.

Daily Swing Chart Technical Analysis

Based on the early price action, the direction of the EUR/USD on Tuesday is likely to be determined by trader reaction to the short-term 50% level at 1.1811.

Bullish Scenario

A sustained move over 1.1811 will indicate the presence of buyers. This could create the upside momentum needed to take out the 1.1831 main top, followed by the Fibonacci level at 1.1859.

Bearish Scenario

A sustained move under 1.1811 will signal the presence of sellers. This could trigger an acceleration into the minor pivot at 1.1760.

For a look at all of today’s economic events, check out our economic calendar.

Dollar Under Pressure but EUR/AUD Stands Out

Indices and American Dollar collapsed yesterday. Tuesday brings us a reversal attempt on stocks but Dollar remains ultra-bearish. We are not surprised with that as we were highlighting this possibility in our video from yesterday. As always, welcome to Trading Sniper, where we have three best trading setups on the market.

First one is the Dollar Index, which is in a downfall after creating the flag and the head and shoulders pattern. Both formations ended with broken supports, which in both cases activates a legitimate sell signal. We do not see much of a hope for buyers but comeback above the neckline could be good for a start. As long as we stay below, the sentiment is negative.

Slide on Dollar Index, usually means rise on EURUSD. It is not different this time. The price came back above two major horizontal resistances and then managed to break the long-term down trendline. That breakout gives us a buy signal and a lot of optimism.

EURUSD may look nice but crème de la crème of today’s video is EURAUD. A long time ago, I spotted a nice sideways trend and was waiting for a breakout ever since, to the upside to be accurate. The breakout happened yesterday and ended 4 months of a boring sideways trend. According to Price Action, that is a strong, long-term buy signal, the one that should come as a reward for patient traders. Lets see how this one will work out.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Stocks Set To Open Higher As Traders Still Hope For A Stimulus Deal

Coronavirus Aid Talks Continue

Yesterday, S&P 500 lost more than 1.5% on signs that U.S. Republicans and Democrats will not be able to reach consensus on the new coronavirus aid package deal before the November election.

Today, S&P 500 futures are gaining ground in premarket trading amid renewed hopes for a stimulus deal. On Monday, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin talked for about an hour and managed to narrow the gap between the positions of Republicans and Democrats.

Their talks will continue today, and traders hope that they will ultimately manage to agree to a new stimulus package. Failure to reach consensus on the new aid deal could lead to another sell-off.

Brexit Talks Have Stalled

EU and Britain continued to blame each other after they failed to reach consensus on the Brexit deal. However, it looks like both sides are not ready to walk away from the deal, and both EU and UK signaled that they were prepared to continue negotiations.

Despite the absence of any material progress, the market believes that the deal is imminent. EUR/USD and GBP/USD have gained ground in October as currency traders have mostly ignored Brexit risks. Meanwhile, stock traders are more focused on the U.S. stimulus deal and the second wave of coronavirus in Europe.

In this situation, a potential Brexit without a deal could turn into a real black swan event for markets as it looks like nobody is prepared for such a scenario.

U.S. Building Permits Increased By 5.2% In September

The U.S. has just provided Building Permits and Housing Starts reports for September. Housing Starts increased by 1.9% after declining by 6.7% in August (revised from -5.1%). Analysts expected that Housing Starts would grow by 2.8%.

Meanwhile, Building Permits grew by 5.2% compared to analyst consensus which called for growth of 1.8%. Back in August, Building Permits decreased by 0.5% (revised from-0.9%).

The housing sector remains a bright spot in the U.S. economy, and the new reports are bullish for stocks.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Daily Forecast – Euro Tries To Continue Its Upside Move

EUR/USD Video 20.10.20.

U.S. Dollar Remains Under Pressure Against Euro

EUR/USD has managed to settle above the resistance at 1.1750 and is trying to get above the next resistance at 1.1780 while the U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index has managed to settle below the 20 EMA at 93.55 on hopes for a new U.S. stimulus package. While the stock market has abandoned such hopes and finished yesterday’s trading session deep in the red zone, currency traders are more optimistic so the U.S. dollar is not able to develop upside momentum.

The nearest support level for the U.S. Dollar Index has emerged near 93.25. In case the U.S. Dollar Index manages to settle below this level, EUR/USD will have good chances to gain additional upside momentum and settle above 1.1800.

Just like the British pound, EUR/USD will remain sensitive to Brexit news. At this point, EU and Britain blame each other for the lack of progress in negotiations. The market believes that both sides are bluffing and that they will ultimately reach a compromise deal.

If this does not happen, EUR/USD may find itself under material pressure as a no-deal Brexit will present an additional problem for the European economy which is currently suffering from the second wave of the virus.

Technical Analysis

eur usd october 20 2020

EUR/USD continues its attempts to settle above the nearest resistance level at 1.1780. In case EUR/USD manages to get above this level, it will gain additional upside momentum and head towards the next resistance at October highs at 1.1830.

A move above 1.1830 will signal that EUR/USD is ready to move higher. In this case, EUR/USD will have to deal with the resistance at 1.1870 on the way to the major resistance level at 1.1910.

On the support side, the previous resistance at 1.1750 will likely serve as the first support level for EUR/USD. If EUR/USD settles below this level, it will decline towards the next support at 1.1720. A move below the support at 1.1720 will open the way to the test of the next support level at 1.1695.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Bulls Fighting to Reach 1.1925 Target Zone

The EUR/USD made a strong bullish bounce at the 61.8% Fibonacci support zone. This could indicate a larger bullish ABC pattern (purple).

This article will indicate the key zone for the confirmation of the breakout. We also review the targets and invalidation spots.

Price Charts and Technical Analysis

EUR/USD 4 hour chart

The EUR/USD is testing a key resistance trend line (orange). A bullish breakout above the resistance trend line (orange) and Fractal (red box) confirms the uptrend continuation (green arrows).

In this case, price action is expected to reach the Wizz and Fibonacci targets. The main target could be as high as 1.1925-50 zone where the larger wave C (purple) could be completed.

A bearish breakout (orange arrows) is expected to be just a pullback within wave B (purple). A bullish reversal (blue arrows) could confirm the current wave pattern. Only a break below the bottom invalidates it (red x).

On the 1 hour chart, price action is using the 21 ema zone as a support for a bullish bounce. The 50% Fib also remains a key support zone.

A break below the top of wave 1 invalidates the wave 1-2-3 (purple) pattern but not the entire bullish outlook. Only a break below the bottom would invalidate the entire bullish pattern (red x).

EUR/USD 1 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

For a look at all of today’s economic events, check out our economic calendar.

 

A Quiet Economic Calendar Leaves U.S Politics, COVID-19, and Brexit in Focus

Earlier in the Day:

It’s was a relatively quiet start to the day on the economic calendar this morning. The Kiwi Dollar and Aussie Dollar were in action early on, with the PBoC also in the spotlight.

Away from the economic calendar, the markets also responded to the lack of progress on Capitol Hill.

For the Kiwi Dollar

In the 3rd quarter, the NZIER Business Confidence

According to the NZIER Quarterly Survey of Business Opinion,

  • A net 40% of firms expect business conditions to deteriorate in the 3rd quarter, compared with 63% in the previous quarter.
  • The building sector was the most confident, with a net 7% of firms expecting an improvement in the economy near-term.
  • Other sectors were more cautious. While manufacturers were less pessimistic, the service sector was the most pessimistic. A net 49% of services firms expect a worsening in general economic conditions in the coming months.
  • Uncertainty continues to plague the services sector after the adverse effects of lockdown and border restrictions.

The Kiwi Dollar moved from $0.66047 to $0.66027 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.30% to $0.6586.

For the Aussie Dollar

The RBA monetary policy meeting minutes drew interest early this morning.

Salient points from the minutes included:

  • Members observed that the global economy was recovering but that most economies were still some way off pre-pandemic output levels.
  • The continuation of the recovery was dependent upon the containment of the virus.
  • China’s economic recovery was the most advanced, while globally, inflation remained very low and below central bank targets.

Domestically,

  • While Australia saw its largest economic contraction since the 1930s, members noted that the decline in output had been smaller than expected.
  • Labour market conditions had improved, with the unemployment rate likely to peak at a lower rate than previously expected.
  • The RBA expects both unemployment and underemployment to remain high for an extended period of time.
  • Members considered that the economy would need fiscal and monetary support for some time.
  • Members also noted that the effects of monetary policy easing had been impaired as a result of restrictions on activity in parts of the economy.
  • As the economy opens up, however, members considered it reasonable to expect further monetary policy easing to gain more traction.
  • The Board also considered the nature of the forward guidance regarding the cash rate. Given the higher level of uncertainty about inflation dynamics, the Board agreed to place more weight on actual, not forecast, inflation for its decision-making.
  • Members also indicated that they would like to see more than just progress towards full employment before considering an increase in the cash rate.

The Aussie Dollar moved from $0.70559 to $0.70582 upon release of the minutes. At the time of writing, the Aussie Dollar was down by 0.44% to $0.7043.

Out of China

The markets are expecting that the PBoC will leave Loan Prime Rates unchanged this morning. Currently, the 1-year LPR sits at 3.85%, with the 5-year at 4.65%.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.10% ¥105.54 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. Wholesale inflation figures for September are due out of Germany.

We don’t expect too much influence on the EUR, however, with COVID-19 numbers and any Brexit chatter in focus.

At the time of writing, the EUR was up by 0.02% to $1.1771.

For the Pound

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out to provide the Pound with direction.

The lack of stats will leave any further chatter on Brexit and updates on COVID-19 in focus.

While Downing Street announced an end to negotiations, the markets are expecting talks to resume. Boris Johnson left the door open for further talks, though it remains to be seen whether the EU will compromise…

At the time of writing, the Pound was flat at $1.2948.

Across the Pond

It’s a relatively quiet day ahead for the U.S Dollar.

September building permits and housing starts are due out later this afternoon.

Barring particularly dire numbers, we would expect the markets to brush aside the numbers.

The focus will be on the U.S Presidential Election polls, the Senate polls, and chatter from Capitol Hill.

Expect updates on COVID-19 to also influence on the day.

At the time of writing, the Dollar Spot Index was down by 0.02% to 93.404.

For the Loonie

It’s a particularly quiet day ahead. There are no key stats due out of Canada to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of COVID-19 and U.S politics on the day. A continued rise in new COVID-19 cases will continue to test support for the Loonie.

At the time of writing, the Loonie was up by 0.02% to C$1.3190 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

Dollar Comes Back to the Bearish Territory

Nasdaq is still below dynamic and horizontal resistance

SP500 is on a good way to break crucial levels and go higher

DAX sharply bounces from the 12960 points

Dollar Index ignores the inverse head and shoulders and creates a flag. Situation here is bearish

EURUSD are flirting with important dynamic resistance

GBPUSD are one step from breaking 1,3 – the most important level in the past few weeks

AUDUSD with a small bullish correction but the main sentiment is very negative

EURAUD makes another attempt to escape from the long-term rectangle

EURCHF breaks crucial support and later tests it as a resistance. Pretty standard price action move

Gold tries to go higher but the upper line of the pennant looks well defended

EUR/USD Price Forecast – Euro Kicks Off the Week to the Upside

The Euro rallied significantly during the trading session on Monday, reaching towards the 1.18 level. This of course is a large, round, psychologically significant figure, and should be paid attention to for that reason. Furthermore, the uptrend line above should offer resistance, while the 1.17 level underneath offers plenty of support. At this point, the market looks very likely to continue chopping around and going sideways in general.

EUR/USD Video 20.10.20

The 50 day EMA is sitting underneath, sitting just above the 1.17 handle, so that of course is something that people will pay attention to. If we can break above the uptrend line that we had broken through, then we could go looking towards the 1.1850 level, and then the 1.19 level. There is a ton of resistance above, so I think that any rally at this point is probably going to be sold into. Having said that, we have recently made what could be thought of as a “higher low”, but I think it is up bit premature to call it that yet. After all, there are a lot of concerns out there that could drive money into the US dollar, so it is most certainly worth keeping that in the back of their mind. If we do break down below the 1.17 handle, then we could go down to the 1.16 level, and then possibly down to the 1.15 handle after that.

This pair is somewhat sensitive to risk appetite, so if something ugly happens, it will certainly sell this market. Furthermore, the European Union has to worry about the possibility of lockdowns and a continuation of plenty of new coronavirus infections that are rapidly increasing.

For a look at all of today’s economic events, check out our economic calendar.

Central & Eastern Europe Sovereign Update: Full Economic Recovery to be Gradual and Uneven

Download Scope Ratings’ Central and Eastern European macroeconomic update.

Lingering uncertainties over the duration of the Covid-19 pandemic are the main downside risks to the CEE region’s growth prospects in Q4 2020 and 2021 which are also tied to the uneven and slowing economic rebound in western Europe – assuming that governments impose restrictions to contain the renewed wave of Covid-19 infections that are less economically damaging than they were in March and April.

We acknowledge that daily coronavirus cases and fatalities have reached record levels in many countries of the region, which will inevitably have an adverse impact on economic recovery.

That said, this year’s slump in GDP in Central and Easter Europe may not be as bad as it looked several months ago due to less severe declines in Q2 output and a stronger Q3 rebound that we expected at the time of our previous forecasts in July.

Decisive monetary-policy action by the region’s central banks and fiscal stimulus from governments have spared the region from a possibly markedly larger economic contraction this year.

Keep expectations in check of a rapid and uniform economic recovery in Q4 2020, 2021

However, we would caution against expectations of a rapid and uniform economic comeback in 2020. The regional recovery, after significant interruptions, will remain vulnerable to setbacks in 2021 even if we expect gradual economic normalisation to resume by early next year.

Scope has marginally improved its 2020 forecast for Poland (A+/Stable) to a 3.9% decline in output from 4.2% forecast three months ago, reflecting the economy’s relatively modest exposure to international tourism and global supply chains, both badly disrupted by the pandemic.

Economic prospects in Turkey (B+/Stable) remain finely balanced, given the tense geopolitical situation in the eastern Mediterranean and the Caucasus and ebbing foreign investor confidence in Ankara’s domestic economic policy, reflected in declining foreign-exchange reserves and a weakening currency. Scope forecasts Turkey’s output to fall 1.4% this year, revised from -4.2% in July forecasts.

We have also moderated our forecast for the scale of the 2020 recession in Russia (BBB/Stable) as well to -5.5% from a previous expectation of -6.8%. Russia’s sizeable fiscal and FX reserves enable an extensive policy response in support of its economy, but uncertainty over oil prices, upcoming fiscal consolidation and sluggish private-sector demand may impede recovery.

Recessions this year could also be milder than previously expected in the Czech Republic (AA/Stable) at -7% compared with -7.5% in July, Romania (BBB-/Negative) -5.5% vs -6.3%, Slovenia (A/Stable) -7% vs -7.6% and Bulgaria (BBB+/Stable) -5% vs -7%. Scope’s forecasts for a deep contraction in GDP are unchanged in Hungary (BBB+/Stable) at -6%, Slovakia (A+/Negative) at -8.1%, and Croatia (BBB-/Stable) at -8.9%.

The economic outlook is less gloomy in the Baltics this year. We forecast a fall in GDP in Lithuania (A-/Positive) of -1.5%, revised from a previous forecast of -7.6%, after surprisingly resilient economic activity in the second quarter; Estonia (AA-/Stable) revised to -5.5% from -7.7%; Latvia (A-/Stable) to -5.5% from -8%/. Georgia (BB/Negative) faces a steep recession this year equivalent to a 5% drop in GDP.

Monetary policy to remain unchanged, supporting the economy through this crisis

For CEE euro area member states, the ECB’s asset purchase programmes underpin low borrowing rates, bolstered by the euro’s reserve-currency status. We don’t expect monetary tightening by most non-euro-area CEE central banks near term, as they remain focused on providing accommodative financial conditions in support of weakened economies. The Turkish central bank is one exception, with pressures for tighter monetary policy stemming from rising inflationary pressure linked to the Turkish lira’s loss in value this year.

The strength of recovery across CEE depends in part on labour markets. Governments’ short-time work schemes have forestalled sharp rises in unemployment. The possible extension of support programmes assisted by the EU’s SURE loans will prove crucial in containing future rises in jobless rates.

Much is also riding on the efficient deployment of the recently agreed EU budget, including the EUR 750bn recovery fund, which should support recovery in EU member states of the region and facilitate needed medium-term investment.

Scope expects a rebound in growth for most economies in the region next year, ranging from 3.5% in Russia to 7.2% growth in Turkey under its baseline scenario which assumes that pre-crisis output levels are reached in most country cases by early 2022.

For a look at all of today’s economic events, check out our economic calendar.

Levon Kameryan is a Sovereign and Public Sector analyst at Scope Ratings GmbH.

EUR/USD Mid-Session Technical Analysis for October 19, 2020

The Euro is trading sharply higher after posting a rapid turnaround following a flat overnight session. Traders are keying off of a weaker dollar, which is losing ground on renewed stimulus talks. Investors are also focusing on the looming U.S. election and worries over rising coronavirus cases.

Continued talks over the weekend between Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi have yet to see any concrete details, but Pelosi has set Tuesday as a deadline for progress and any deal would likely be around $2 trillion figure, so the greenback is under pressure from the debt and spending dynamic.

At 12:33 GMT, the EUR/USD is trading 1.1782, up 0.0066 or +0.56%.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1831 will change the main trend to up. A move through 1.1612 will reaffirm the downtrend.

The minor trend is also down. A move through 1.1688 will signal a resumption of the minor downtrend.

The short-term range is 1.2011 to 1.1612. Its retracement zone at 1.1811 to 1.1859 is the primary upside target.

The main support is the retracement zone at 1.1691 to 1.1616. The upper level essentially stopped the selling last Thursday at 1.1688.

Daily Swing Chart Technical Forecast

The current upside momentum looks strong enough to lead to a test of the short-term 50% level at 1.1811. Overtaking this level could trigger a change in trend over 1.1831, followed by the Fibonacci level at 1.1859.

On the downside, the strongest support is 1.1691 to 1.1688.

The new minor range is 1.1831 to 1.1688. Its pivot at 1.1760 is controlling the price action. We’re looking for the current upside bias to continue as long as the EUR/USD remains over the pivot.

The early price action suggests we’re in a headline driven market on Monday. This could lead to heightened volatility.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Daily Forecast – Virus Worries Put Pressure On Euro

EUR/USD Video 19.10.20.

U.S. Dollar Gains Ground Against Euro At The Start Of The Week

EUR/USD is losing some ground at the start of the week while the U.S. dollar is little changed against a broad basket of currencies.

On Friday, EU reported inflation data that was fully in line with the analyst consensus. Inflation Rate was -0.3% year-over-year in September while Core Inflation Rate was 0.2%. EU inflation remains weak which is not surprising given the negative impact of the pandemic.

Today, EU will provide Construction Output data for August. Analysts forecast that Construction Output will decline by 4.4%.

In addition to economic news, EUR/USD traders will pay attention to the latest developments on the coronavirus front in Europe. On Sunday, Italy reported 11,705 new cases which was a daily record.

Italian Prime Minister Guiseppe Conte stated that the situation was critical and provided mayors of Italian cities with the power to shut down public squares from 9 p.m.

At this point, it looks like traders are more worried about coronavirus than about Brexit. GBP/USD is gaining ground despite the lack of progress in Brexit negotiations, while EUR/USD is under some pressure.

Technical Analysis

eur usd october 19 2020

EUR/USD continues its attempts to settle below the nearest support level at 1.1695. EUR/USD has already tested this level several times but the support at 1.1695 remained strong.

In case EUR/USD declines below this support level, it will gain downside momentum and move towards the next support level at 1.1630. RSI is in the moderate territory so there is plenty of room to develop momentum in case the right catalysts emerge.

If EUR/USD manages to settle below the support at 1.1630, it will head towards the next support level at 1.1580.

On the upside, the nearest resistance level for EUR/USD has emerged at 1.1720. In case EUR/USD settles above this level, it will gain upside momentum and head towards the major resistance level at 1.1750.

A move above the resistance at 1.1750 will signal that EUR/USD is ready to get back to the upside mode. In this case, EUR/USD will move towards the next resistance at 1.1780.

For a look at all of today’s economic events, check out our economic calendar.

Riskier Assets Find Support, with China Stats, COVID-19, and U.S Politics in Focus

Earlier in the Day:

It’s was a particularly busy start to the day on the economic calendar this morning. The Japanese Yen was in action early on, with economic data from China also in focus. Away from the economic calendar, U.S politics and COVID-19 were also in focus.

Positive chatter from Capitol Hill and hopes of a COVID-19 vaccine supported riskier assets early on.

Nancy Pelosi raised hope of a pre-Election Stimulus Bill over the weekend, while also setting a deadline for talks.

At the end of last week, U.S Pharma Phizer talked of having a COVID-19 vaccine ready before the end of the year.

For the Japanese Yen

Japan’s trade surplus widened from ¥248.6bn to ¥675.0bn in September. Economists had forecast a widening to ¥989.8bn.

According to figures released by the  Ministry of Finance,

  • Exports fell by 4.9% when compared with September 2019.
    • Exports to China jumped by 14.0%, while down by 2.0% to Asia.
    • Exports to the U.S rose by just 0.7%, while exports to Western Europe fell by 6.4%.
  • Imports tumbled by 17.2% when compared with September 2019.
    • Imports from China slid by 11.9% while falling by 12.6% from Asia.
    • From the U.S, imports fell by 9.9%, with imports from Western Europe sliding by 14.4%.

The Japanese Yen moved from ¥105.426 to ¥105.443 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.01% ¥105.41 against the U.S Dollar.

Out of China

3rd quarter GDP, fixed asset investment, industrial production, retail sales, and unemployment figures were in focus this morning.

In the 3rd quarter, China’s economy grew by 2.7%, quarter-on-quarter, following 11.5% growth in the 2nd quarter. Year-on-year, the economy expanded by 4.9%, following 3.2% growth in the 2nd quarter. Economists had forecasted growth of 3.2% and 5.2% respectively.

Industrial production increased by 6.9%, year-on-year, in September, following a 5.6% rise in August. Economists had forecast a 5.8% increase.

Retail sales increased by 3.3%, following a 0.5% increase in August. Economists had forecast a 1.8% rise.

The unemployment rate declined from 5.6% to 5.4% in September, which was better than a forecasted decline to 5.5%.

The Aussie Dollar moved from $0.71031 to $0.70961 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.27% to $0.7100.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.30% to $0.6622.

The Day Ahead:

For the EUR

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide the EUR with direction.

A lack of stats leaves the EUR in the hands of COVID-19 and any further chatter on Brexit.

With lockdown measures being introduced in Europe, any further steps to contain the virus will test EUR support.

At the time of writing, the EUR was down by 0.05% to $1.1712.

For the Pound

It’s also a quiet day ahead on the economic calendar. There are no material stats due out to provide the Pound with direction.

A lack of stats will leave the markets to react to any Brexit chatter and COVID-19 news.

Further COVID-19 restrictions are expected on Monday, which would be Pound negative.

At the time of writing, the Pound was up by 0.10% to $1.2928.

Across the Pond

It’s a quiet day ahead for the U.S Dollar.

With no material stats due out of the U.S, the focus will be on Capitol Hill and the U.S elections.

The markets are looking for a clean sweep, which will bring the Senate elections into focus. As Biden leads Trump in the Presidential Election polls, the Democrats will need to stay ahead in the senate polls to support riskier assets.

On Capitol Hill, any hint of progress towards a COVID-19 stimulus Bill would also support riskier assets on the day.

At the time of writing, the Dollar Spot Index was up by 0.02% to 93.697.

For the Loonie

It’s a relatively quiet day ahead. Key stats due out of Canada include August wholesale sales figures.

We don’t expect too much influence on the Loonie, however. COVID-19 news updates and market sentiment towards the economic outlook and demand for crude will remain the key drivers.

At the time of writing, the Loonie was up by 0.09% to C$1.3177 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – U.S Politics, COVID-19, Brexit, and Private Sector PMIs in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 57 stats in focus in the week ending 23rd October. In the week prior, 56 stats had been in focus.

For the Dollar:

It’s a relatively quiet week ahead on the economic data front.

On Tuesday, Wednesday, and Thursday, housing sector figures for September are in focus.

With mortgage rates hovering close to historic lows, the numbers are unlikely to have a material impact on the Dollar.

On Thursday, however, U.S jobless claims figures will influence ahead of private sector PMIs on Friday.

October’s prelim services, manufacturing, and composite PMIs are due out at the end of the week.

Expect the Services PMI to be the key driver. The markets will be looking for a pickup in service sector activity…

Away from the economic calendar, we are just over 2-weeks away from the U.S Presidential Election. Wednesday’s final live televised Presidential debate will garner plenty of attention as will chatter from Capitol Hill. We can also expect increased interest in the Senate Election polls.

The Dollar Spot Index ended the week up by 0.67% to 93.682.

For the EUR:

It’s also a relatively busy week ahead on the economic data front.

On Tuesday, German wholesale inflation figures are due out ahead of a busier 2nd half of the week.

On Thursday, Germany is back in focus, with November consumer climate figures due out.

Prelim October private sector PMIs from France, Germany, and the Eurozone will be the key drivers on Friday, however.

We can expect plenty of sensitivity to the numbers. A new spike in new COVID-19 cases in France and other parts of the EU may have impacted activity at the start of the quarter.

Away from the economic calendar, Brexit and COVID-19 will need monitoring throughout the week.

The EUR/USD ended the week down by 0.91% to $1.1718.

For the Pound:

It’s a busy week ahead on the economic calendar.

The markets will have to wait until Wednesday, however, for the first set of numbers.

Inflation figures for September are due out ahead of CBI industrial trend orders on Thursday.

We would expect the Pound to be sensitive to the inflation figures ahead of a busy end to the week.

On Friday, retail sales figures for September and prelim October private sector PMIs will provide direction.

With the BoE open to negative rates, dire numbers will test support for the Pound.

Of greater influence in the week, however, will be Brexit and COVID-19 news.

The GBP/USD ended the week down by 0.93% to $1.2915.

For the Loonie:

It’s a relatively busy week ahead on the economic calendar.

At the start of the week, wholesale sales figures for August are in focus on Monday.

We don’t expect too much influence from the numbers, however.

On Wednesday, September inflation and August retail sales figures will provide direction.

From elsewhere, expect GDP numbers from China and prelim private sector PMIs from the Eurozone and the U.S to also influence.

Away from the economic calendar, risk appetite will likely be dictated by COVID-19 and the U.S Presidential Election polls. There’s also the final presidential debate to consider on Wednesday.

The Loonie ended the week down by 0.52% to C$1.3189 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a particularly quiet week ahead on the economic calendar.

There are no material stats due out of Australia to provide the Aussie with direction.

The lack of stats will leave the Aussie Dollar firmly in the hands of market risk sentiment in the week.

Expect China’s GDP numbers and prelim PMIs from the Eurozone and the U.S to influence

On the monetary policy front, the RBA meeting minutes at the start of the week will garner interest. There has been the talk of an RBA move next month, the minutes could reveal what is on the cards…

The Aussie Dollar ended the week down by 2.20% to $0.7081.

For the Kiwi Dollar:

It’s also a relatively busy week ahead on the economic calendar.

In the 1st half of the week, 3rd quarter business confidence figures are due out. A pickup in confidence would provide support to the Kiwi ahead of a busy Friday.

Trade data for May and 3rd quarter inflation figures will influence at the end of the week.

While the stats will provide direction, however, economic data from China and COVID-19 will likely be the key drivers.

The Kiwi Dollar ended the week down by 0.96% to $0.6602.

For the Japanese Yen:

It is a relatively quiet week on the economic calendar.

Trade data for September will draw interest at the start of the week ahead of inflation at the end of the week.

We don’t expect the numbers to have too much influence on the Yen, however.

The key driver for the Japanese Yen, however, will be COVID-19 news and U.S politics.

The Japanese Yen ended the week up by 0.21% to ¥105.40 against the U.S Dollar.

Out of China

It’s a busy week ahead on the economic data front.

3rd quarter GDP numbers due out on Monday will be the key driver for the Yuan and market risk sentiment.

September’s industrial production, retail sales, and unemployment figures will also influence.

Barring particularly dire numbers, the fixed asset investment numbers should have a muted impact.

On the monetary policy front, the PBoC is in action on Tuesday. The markets are expecting the PBoC to leave loan prime rates unchanged. Any unexpected rate cut could spook the markets…

The Chinese Yuan ended the week down by 0.04% to CNY6.6976 against the U.S Dollar.

Geo-Politics

UK Politics:

On Friday, Boris Johnson announced that Brexit negotiations were over. Downing Street added the EU chief negotiator Barnier does not need to return to London in the week ahead.

Following the EU’s attempts to leave the ball in Britain’s court, with Fisheries a key issue, it now rests with the EU to compromise. Johnson has been clear that it would not leave fishing access unchanged, despite Macron’s attempts to strong-arm Britain into yielding.

For French fishermen, it would ultimately mean no access to UK fisheries should Britain leave without a deal…

Also at the start of the week, the British Prime Minister is due to announce more containment measures. With the number of new COVID-19 cases continuing to rise, further restrictions would be Pound negative.

U.S Politics

After last week’s individual town hall sessions, the final live televised debate will take place on Wednesday.

It will be a chance for Trump to narrow the gap ahead of the 3rd November Election.

If past performance is any indicator of future performance, however, it could just give Biden a greater edge.

As the markets begin to write-off a Trump victory, the focus will likely shift to the Senate Elections.

A blue wave is expected that would support further stimulus in the New Year.

The Weekly Wrap – Brexit, COVID-19, and U.S Politics Drive the Majors

The Stats

It was a busier week on the economic calendar, in the week ending 16th October.

A total of 56 stats were monitored, following 43 stats from the week prior.

Of the 56 stats, 24 came in ahead of forecasts, with 21 economic indicators came up short of forecasts. 11 stats were in line with forecasts in the week.

Looking at the numbers, 20 of the stats also reflected an upward trend from previous figures. Of the remaining 36 stats, 27 reflected a deterioration from previous.

For the Greenback, it was back into the green after 2 consecutive weeks in the red. The Dollar Spot Index rose by 0.67% to 93.682. In the week ending 9th October, the Dollar Spot Index had fallen by 0.87% to 93.057.

Market risk appetite waned in the week. There were a number of factors driving demand for the Dollar. A lack of progress towards a U.S stimulus bill and a spike in COVID-19 cases were front and center in the week.

Disappointing economic data and Brexit woes also supported the demand for the safety of the Dollar.

Out of the U.S

It was a relatively busy week on the economic data front.

Inflation figures drew interest early in the week. In the 2nd half of the week, however, jobless claims and retail sales figures were the key drivers. Prelim October consumer sentiment figures were also in focus late on Friday.

In the week ending 9th October, initial jobless claims stood at 898k, which was up from 845k from the week prior. The numbers reinforced the view that the labor market recovery had stalled.

A combination of dire labor market conditions, rising new COVID-19 cases, and a lack of further stimulus was a bad combination.

At the end of the week, retail sales impressed, however. In September, retail sales rose by 1.9%, with core retail sales rising by 1.5%. Economists had forecasted increases of 0.5% and 0.7% respectively.

Aligned with the retail sales figures was a further pickup in consumer sentiment. The Michigan Consumer Sentiment Index rose from 80.4 to 81.2 in October, according to prelim figures. The Expectations Index increased from 75.6 to 78.8.

The only negative on the day was an unexpected 0.6% fall in industrial production.

In the equity markets, the NASDAQ rose by 0.79%, with the Dow and S&P500 gaining 0.07% and 0.19% respectively.

Out of the UK

It was a relatively busy week on the economic data front.

Key stats included August unemployment rate and employment change and September claimant count figures.

While claimant counts came in lower than expected, employment fell by more than expected over the 3-months to August.

A 153k fall in employment led to an increase in the unemployment rate from 4.1% to 4.5%.

While the stats provided direction, it was ultimately Brexit and COVID-19 that sank the Pound in the week.

A continued rise in new COVID-19 cases and a new round of containment measures were Pound negative.

More significantly, however, was a lack of progress towards a Brexit agreement, with the EU pushing for more talks next week.

On Friday, Boris Johnson announced that it was time to prepare for a no-trade deal Brexit unless the EU changed its stance. Downing Street also stated that there was no point in EU negotiator Michel Barnier returning to London in the week ahead.

In the week, the Pound fell by 0.93% to $1.2915. In the week prior, the Pound had risen by 0.78% to $1.3036.

The FTSE100 ended the week down by 1.61%, partially reversing a 1.94% gain from the previous week.

Out of the Eurozone

It was a relatively busy week on the economic data front.

Early in the week, key stats included ZEW Economic Sentiment figures for the Eurozone and Germany.

The indicators flashed red for October. Germany’s Economic Sentiment Indicator fell from 77.4 to 56.1, with the Eurozone’s falling from 73.9 to 52.3. A lack of progress on Brexit and jitters over the U.S Presidential Election weighed in October.

Mid-week, industrial production figures for the Eurozone came up short of expectations, rising by just 0.7%. In July, production had jumped by 5.0%.

In the 2nd half of the week, Eurozone trade data and finalized inflation figures for September were in focus.

Inflation figures reaffirmed market concern over deflationary pressures. Trade data also failed to impress, with the Eurozone’s trade surplus narrowing from €27.9bn to €14.7bn in August.

While the stats provided direction, a marked increase in new COVID-19 cases weighed on the EUR in the week. France and other member states were forced to reintroduce containment measures amidst the 2nd wave.

For the week, the EUR fell by 0.91% to $1.1718. In the week prior, the EUR had risen by 0.94% to $1.1826.

For the European major indexes, it was a bearish week. The CAC40 and EuroStoxx600 fell by 0.22% and by 0.77% respectively, with the DAX30 declining by 1.09%.

For the Loonie

It was a quiet week on the economic data front.

Key stats included August’s foreign security purchases and manufacturing sales figures.

Neither set of numbers had an impact, however, as the fresh spike in new COVID-19 cases weighed on market risk sentiment.

The threat of a reintroduction of lockdown measures pegged back crude oil prices in the week.

In the week ending 16th October, the Loonie fell by 0.52% to end the week at C$1.3189. In the week prior, the Loonie had risen by 0.87%.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 16th October, the Aussie Dollar slid by 2.20% to $0.7081. The Kiwi Dollar ended the week down by a more modest 0.96% to $0.6602.

For the Aussie Dollar

It was a relatively quiet week on the economic calendar.

Key stats consumer confidence and employment figures.

It was a mixed bag for the Aussie Dollar. While consumer confidence continued to improve, employment figures were somewhat disappointing.

The unemployment rate rose from 6.8% to 6.9%, driven by a 29.5k fall in employment.

For the Aussie Dollar, it was ultimately market sentiment towards monetary policy and risk aversion that did the damage. There is the talk of an RBA next month…

For the Kiwi Dollar

It was a relatively quiet week on the economic calendar.

Key stats included electronic card retail sales figures and business PMI numbers.

The stats were Kiwi Dollar positive, with retail sales up by 5.4% and the PMI rising from 50.7 to 54.0.

While positive, however, market risk aversion pegged the Kiwi Dollar back in the week.

For the Japanese Yen

It was also a relatively quiet week on the economic calendar.

August’s core machinery orders and finalized industrial production figures were in focus.

The stats were skewed to the negative in the week. Core machinery orders rose by just 0.2%, following a 6.3% jump in July. Industrial production was revised down from 1.7% to 1.0%.

Ultimately, however, it was market risk sentiment that delivered the support for the Yen.

The Japanese Yen rose by 0.21% to ¥105.4 against the U.S Dollar. In the week prior, the Yen had fallen by 0.31%.

Out of China

It was a relatively busy week on the economic data front following last week’s holiday.

Key stats included September’s trade data and inflation figures, which were skewed to the negative.

China’s U.S Dollar trade surplus narrowed from $58.93bn to $37.00bn, driven by a 13.2% jump in imports. Exports rose by a more modest 9.9%.

Inflationary pressures also softened at the end of the quarter. China’s annual rate of inflation softened from 2.4% to 1.7% in September. Wholesale deflationary pressures picked up marginally. The producer price index fell by 2.1%, following a 2.0% decline in August.

In the week ending 16th October, the Chinese Yuan slipped by 0.04% to CNY6.6976. In the week prior, the Yuan had risen by 1.42%.

The CSI300 rose by 2.36%, with the Hang Seng gaining 1.11%.

EUR/USD Weekly Price Forecast – Euro Pulls Back From Trendline

The Euro has initially tried to break above the previous uptrend line for the week, but then broke down towards the 1.17 level. That being the case, the market is likely to see a lot of choppiness going forward. The market breaking down below the candlestick for the week probably opens up a move towards the 1.16 handle, and then eventually the market will go looking towards 1.15 handle. That is an area that is going to be interesting, mainly because on the daily chart you can see the 200 day EMA reaching towards it. Beyond that, the 1.15 level is of course very interesting due to the fact that it is such a big figure.

EUR/USD Video 19.10.20

The European Union is starting to see a lot of downward pressure economically due to the lockdowns coming, and it now appears that stimulus is probably going to be delayed in America. That could lead to a potential pullback, and quite frankly when you look at this chart you can see quite easily that it has gotten a bit ahead of itself anyway, so a pullback makes sense.

Even if we do break above the uptrend line, the market is likely to see a lot of noise all the way to the 1.20 level, so even on a breakout I would still be a bit suspicious because there are too many problems with the Euro region, and of course the technical “rounding top” that had formed. If we were to break above the 1.20 level, the Euro is going to take off.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Mid-Session Technical Analysis for October 16, 2020

The Euro is trading slightly better against the U.S. Dollar on Friday. Profit-taking ahead of the weekend after a steep break this week could be behind the price action.

In the U.S., Core Retail Sales rose 1.5% and Retail Sales were up 1.9%.

Euro Zone annual inflation fell for the second month running to a four-year low in September, the European Union’s statistics office Eurostat confirmed on Friday, mainly as a result of a sharp drop in volatile energy prices.

At 13:20 GMT, the EUR/USD is trading 1.17282, up 0.0021 or +0.18%.

Eurostat said consumer inflation in the 19 countries sharing the Euro was plus 0.1% month-on-month in September for a 0.3% year-on-year fall after a 0.2% annual price decline in August – in line with initial estimates released at the start of October.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The main trend will change to up on a trade through 1.1831. A move through 1.1613 will reaffirm the downtrend.

The first minor range is 1.1613 to 1.1831. The EUR/USD is currently being tested at 1.1722 to 1.1696.

The minor range is 1.1831 to 1.1689. Its 50% level at 1.1760 is the next target.

On the upside, the key target area is 1.1812 to 1.1831. The major support is 1.1613 to 1.1589.

Daily Swing Chart Technical Forecast

The early price action on Friday indicates a bullish tone could develop on a sustained move over 1.1722 and a bearish tone could develop on a sustained move under 1.1696.

Bullish Scenario

A sustained move over 1.1722 will indicate the presence of buyers. This could trigger a rally into 1.1760. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 1.1722 will signal the presence of sellers. The first downside target is 1.1696, followed closely by 1.1689. This is a potential trigger point for an acceleration to the downside.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Price Forecast – Euro Bounces From Same Figure

The Euro has initially tried to break down below the 1.17 level but then turned around to bounce a bit. This is a sign that the market is trying to find its footing, but we had recently broken down through a major uptrend line. The uptrend line had been very reliable for some time, but as we breakdown through there and then reached towards the bottom of that uptrend line to confirm the “market memory.” Because of this, I do think that it still likely to be a scenario where you look to short signs of exhaustion on shorter-term charts.

EUR/USD Video 19.10.20

Looking at this chart, the question now is whether or not we can finally break out above the uptrend line again. If we do not, then it is obvious that we will continue to sell off, at least in the short term. I believe that breaking below the 1.17 level opens up the door to reaching down towards the 1.16 level, which is of course where we had bounced from. We are currently going back and forth around the 50 day EMA, and that indicator is flattening out, showing that the market is not quite ready to make a huge move.

Nonetheless, I think that there are a lot of concerns out there when it comes to global growth and geopolitics, so that could drive up the value of the US dollar in general which of course will show itself here as well. To the downside, I think that we could find a “floor the market” closer to the 1.15 level as the 200 day EMA is racing towards there. If we were to rally from here, we have a lot of work to get past the recent topping pattern, meaning that there is noise all the way to the 1.20 level.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Stocks Set To Open Higher As Retail Sales Increased By 1.9% In September

Strong Retail Sales Report Could Provide More Support To Stocks

The U.S. has just provided Retail Sales data for September. On a month-over-month basis, Retail Sales grew by 1.9%. Analysts expected that Retail Sales would grow by just 0.7%. Year-over-year, Retail Sales grew by 5.4%.

Excluding Autos, Retail Sales increased by 1.5% compared to analyst consensus which called for growth of 0.5%.

The better-than-expected Retail Sales report will likely provide additional support to stocks, and S&P 500 futures are gaining ground in premarket trading.

Later, the U.S. will provide Industrial Production and Manufacturing Production reports for September. Industrial Production is expected to increase by 0.5% on a month-over-month basis while Manufacturing Production is projected to grow by 0.7%.

UK Prime Minister Boris Johnson Tells Britain To Prepare For A No-Deal Brexit

EU stated that negotiations with UK lacked progress and told London to compromise on key issues or face a no-deal Brexit.

In turn, UK Prime Minister Boris Johnson stated that it was time to prepare for a hard Brexit. According to reports, EU officials did not take Johnson’s words seriously and believed that UK will continue negotiations next week.

Meanwhile, the currency market is not buying the idea of a hard Brexit. GBP/USD and EUR/USD are gaining some ground, indicating that traders believe that UK and EU will ultimately manage to reach a compromise deal. The safe-haven U.S. dollar is losing ground against a broad basket of currencies.

A hard Brexit could hurt world markets as it will put pressure on EU and UK economies at a time when they try to deal with the second wave of coronavirus.

Oil Is Strong Despite Virus Worries

Yesterday, oil made an attempt to settle below the $40 level amid worries about new virus-related restrictions in Europe that could limit demand for oil.

However, oil managed to quickly rebound from lows at $39.25. Currently, oil is losing some ground but stays firmly above $40. The oil market has managed to ignore virus worries which indicates that oil gets strong support near the $40 level.

This strength could ultimately provide the much-needed support for the beaten oil-related stocks which significantly underperform the broader market.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Bear Flag Pattern Aims at 1.1650

The EUR/USD is testing the Fibonacci support levels. Price action is expected to make a bullish reversal at the Fibs despite the bearish breakout.

How far can price fall before finding support? And what are the bullish targets? Let’s review.

Price Charts and Technical Analysis

EUR/USD 4 hour chart

The EUR/USD has reached the 61.8% Fibonacci level, but we are expecting a deeper push lower. The main target is the 78.6% Fib around 1.1650.

The resistance levels (red box) and the 21 ema zone are expected to stop price action from moving higher. Only a breakout above the long-term moving averages would indicate an immediate push up.

Price action should make a bullish bounce at the Fib levels. This would complete a bearish ABC (green) within wave B (orange) and confirm the start of the wave C (orange). Only a break below the bottom invalidates the current ABC (orange) wave pattern.

On the 1 hour chart, we see the main reason why one more bearish price swing is anticipated. The bear flag chart pattern is typical for a wave 4 (red) after price action showed a strong bearish impulse (wave 3).

The wave 4 is invalid if price action is able to break above the bottom of the wave 1 (red x). Also candlesticks that fully break above the 21 ema zone could be a first warning of a pending change in direction.

EUR/USD 1 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

For a look at all of today’s economic events, check out our economic calendar.