EUR/USD Forecast: upward momentum limited by political woes
|EUR/USD Current price: 1.1566
- Risk aversion dominated the weekly opening, USD out of market favor.
- EUR undermined by the outcome of German's Bavarian election.
The American dollar gapped higher at the weekly opening, particularly against European rivals, as weekend political news from the region were quite discouraging. The more heavy weighing headline was the failure in EU-UK Brexit negotiations, as a weekend of negotiations ended with no agreement ahead of the Brexit summit that will take place this Wednesday. Furthermore, Angela Merkel's conservative allies have lost their absolute majority in regional elections in the state of Bavaria, the worst result in almost eight decades.
The EUR/USD pair fell to 1.1540 but recovered throughout the Asian session to trade marginally higher when compared to Friday's close. The dollar is the worst performer with London opening, down against all of its major rivals but the Pound, which remains pressured by Brexit woes.
The EU didn't offer macroeconomic data today, while the US will release the NY Empire State Manufacturing Index for October, foreseen at 20 from the previous 19, and more relevant September Retail Sales. Monthly basis, are expected to have increased by 0.5% vs. 0.1% in August, while the ex-autos figure is expected unchanged at 0.3%. The Retail Sales Control Group is expected at 0.4% vs. the previous 0.1%.
The 4 hours chart for the pair offers a neutral stance, as the price is barely recovering above a bullish 20 SMA, pierced during the Asian session, but below the 100 and 200 SMA which maintain their bearish slopes. The Momentum indicator has bounced modestly after hitting its 100 level, lacking strength while the RSI heads nowhere around 54. More relevant, the pair is unable to surpass the 38.2% retracement of its latest daily slide at around 1.1575, the immediate resistance. An acceleration through this last should lead to an advance up to the 1.1620 region, while bears could take over the pair on a break below 1.1520, the 23.6% retracement of the same rally.
Support levels: 1.1525 1.1490 1.1455
Resistance levels: 1.1575 1.1620 1.1660
View Live chart for the EUR/USD
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