EUR/USD analysis: more uncertainty ahead

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1514

Italian budget deficit weighing on the common currency.
USD dollar lacks strength enough to turn firmly bullish.

The EUR/USD pair finished the week marginally lower at 1.1513, as the greenback eased on Friday amid a better market mood and soft US data, which helped speculative interest to book gains ahead of the weekend. European equities were under pressure as tensions between the EU and Italy dominated the headlines, following comments from Italian PM Conte, who said that he sees no need to change his governments' 2019 budget. However, solid earnings among US companies partially offset the negative tone ahead of London's close. The US released Existing Home Sales for September, which fell by more-than-expected, down 3.4% from a month earlier. This Monday, the macroeconomic calendar will be quite light both shores of the Atlantic, and will only include the German Buba monthly report and the US Chicago Fed National Activity Index for September.

The pair bounced from 1.1432, the second time the pair recovers from the level this October, as investors are not ready to go long full-mode in the greenback again. In the daily chart, the pair has stalled its recovery below a bearish 20 DMA, also below the 23.6% retracement of the early October decline, while technical indicators turned higher, the Momentum now in neutral levels and the RSI at around 44, rather reflecting the latest recovery than supporting another leg higher. The 38.2% retracement of the same decline comes at around 1.1575, providing a more relevant resistance. In the 4 hours chart, technical indicators also recovered, but lost momentum after nearing their midlines, while the price is currently around a bearish 20 SMA and below the larger ones, in line with the longer term perspective.

Support levels: 1.1465 1.1430 1.1400

Resistance levels: 1.1525 1.1575 1.1620

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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