EUR/USD Forecast: looking for a test of the 1.0800/40 region
|The EUR/USD pair trades at its lowest since March, when it bottomed at 1.0821, with the common currency undermined by ECB's latest announcements. On Thursday, the Central Bank decided to maintain its economic policy unchanged, focusing on the need of more accommodation, although expectations of a December QE extension are still high, President Mario Draghi said that any upcoming decision will depend on new forecasts for 2019 that will be available this December.
Early Friday, the ECB released the results of the Q4 2016 Survey of Professional Forecasters, which added fuel to the fire, as inflation expectations have been revised marginally down for 2016 and 2018, but are unchanged for 2017. Longer-term inflation expectations are unchanged at 1.8%. Real GDP growth expectations have been revised up for 2016, but down for 2018 and further ahead.
The macroeconomic calendar is quite light for today, with only the EU's preliminary consumer confidence for October, scheduled for the American afternoon, and a US FED's member speech, not expected to rock the boat.
The EUR/USD pair trades in the 1.0890 region, and technical readings in the 4 hours chart support some further slides, despite technical indicators are in oversold territory, as they maintain their strong bearish momentum, whilst intraday recoveries after breaking through 1.0900, met selling interest in the 1.0910 region, the post Brexit-low. The pair has multiple daily and weekly lows in the 1.0800/40 region, the immediate bearish target on a break below the daily low of 1.0878. A break below 1.0800 seems unlikely, but if it happens, the decline can extend down to 1.0760, although the pair may began correcting quickly from this area.
A steady recovery above 1.0910, on the other hand, could see the pair correcting higher, up to 1.0950, July's low. Above this last, the advance can extend up to the 1.1000 region.
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