EUR/USD Forecast: These three setbacks are pointing to further losses

Euro bears have ended their wait for new depressing economic figures – Brexit is taking care of it. And it is not the only thing that implies further falls for EUR/USD.

1) Brexit limbo

The UK parliament has rejected the government's plan to rush through the Brexit legislation and the UK will probably stay in the EU for longer. The EU will likely grant an extension to Brexit until January 31, 2020. Prime Minister Boris Johnson will now have to decide if he wants to proceed with approving Brexit – he won a majority in the first vote of the deal – or head to elections.

Uncertainty about the next steps weighs on the pound and also the euro. The timeline may become clear only next week.

2) Slow trade talks

White House Economic Adviser Larry Kudlow has said that unresolved issues in the first phase of talks may spill over to the second phase. He added that there is "no update on China talks." 

His comments have weighed on market sentiment, and the risk-off mood favors the safe-haven greenback over the common currency.

3) Uptrend support lost

The four-hour chart is showing that EUR/USD has dropped back below the uptrend that accompanied it since late September. After breaking higher last week, the currency pair has lost this line again. Moreover, momentum turned negative. EUR/USD continues trading above the 50, 100, and 200 Simple Moving Averages – bulls have not lost hope but are in retreat. 

Some support awaits at 1.1115, which capped EUR/USD is early September. Further down, 1.1060 held it down earlier in October. The 1.10 level capped it four times at the beginning of the month and now works as support. 1.0940, 1.0905, and 1.0879 are next.

Resistance awaits at 1.1140, which was a swing high last week. The recent high of 1.1180 is a strong resistance line. Next, we find 1.1225, which held EUR/USD down in August. 

All in all, there are reasons to see further EUR/USD losses.

Looking forward

Significant euro-zone events are scheduled for Thursday. Preliminary Purchasing Managers' Indexes for October carry high expectations – and these may be proved wrong again. 

The European Central Bank is set to leave its policy unchanged in President Mario Draghi's last decision. He may warn about economic deterioration. Germany has nominated Isabel Schnabel to the executive board of the ECB. Schnabel, considered a moderate, will replace Sabine Lautenschláger at the post. It may signal a shift in Germany opposition to loose monetary policy.