EUR/USD Forecast: Hard to rise from the dead on Halloween - new 10 week lows

The EUR/USD is trading in a lower range and dips below critical support.
Euro-zone inflation, the ADP NFP, and other events stand out in a busy end to October.
The technical picture remains reasonably balanced for the pair.

Yohay Elam FXStreet

The EUR/USD trades in the same familiar ranges, but in their lower side and is dipping below 1.1335. The common currency was hit by disappointing GDP figures on Tuesday. The euro-zone grew by only 0.2% QoQ against 0.4% expected. Italy, the third-largest economy stagnated.

The lower-than-expected GDP complicates negotiations between Italy and the European Commission. Rome says that additional spending is needed to ignite the stalling economy while Brussels says that the lower GDP worsens the debt-to-GDP ratio and calls for further cuts.

The Euro managed to climb back up as Germany's inflation levels hit 2.5% YoY, the highest in 10 years in the preliminary report for October. Initial Consumer Price Index numbers for the whole euro-zone are due shortly.

In the US, the Conference Board's Consumer Confidence gauge remained at 18-year highs. It is important to note that the CB figure is substantially above the more moderate measure from the University of Michigan.

Today, the ADP Non-Farm Payrolls report provides the initial hint towards the official Non-Farm Payrolls publication on Friday. A more moderate increase in jobs is on the cards.

The US Mid-Term elections are around the corner, with six days to go. President Donald Trump suggested eliminating the right to citizenship by birthright. The idea may face significant legal hurdles and is seen as a ploy to place immigration on the agenda ahead of the vote.

Democrats remain favorites to flip the House, and this may limit US Dollar strength.

The last day of October is Halloween and may result in some spooking from last-minute moves. Money managers need to adjust their portfolios. Choppy prices action may be seen later on.

EUR/USD Technical Analysis

The EUR/USD is challenging the lower end of the recent range, which starts from last week's low of 1.1335 to 1.1360 which served as support early in the week and capped the pair earlier in the day.

The Relative Strength Index on the four-hour chart is below 50 but above 30, not indicating oversold conditions. Momentum is a tad to the downside. While the trend is bearish, it is not overly so.

Below 1.1335, the 2018 trough of 1.1300 awaits the EUR/USD. Further down, we are back to levels last seen in 2018: 1.1200 and 1.1100.

Above 1.1360, resistance awaits at 1.1415 that held the pair down earlier in the week. Close by, 1.1430 was a high point last week. It is followed by 1.1495 and 1.1550 which were swing highs in recent weeks, just before the pair suffered further losses.

More: EUR/USD spooked by critical support, break or bounce - Confluence Detector

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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