EUR/USD Forecast: Trump's trade summit to determine next moves after 150-pip October rally


  • EUR/USD has extended its gradual advance amid optimism about trade and Brexit.
  • Trade developments and US Consumer Sentiment are set to dominate trading.
  • Friday's four-hour chart is showing that EUR/USD bulls are in control. 

Do not underestimate the tortoise – EUR/USD has been a slow mover, but it is already 150-pips above October's lows. The world's most popular currency pair has not looked back after breaking above 1.10 early on Thursday. 

What is driving the upswing? Optimism regarding US-Sino trade talks has been boosting market sentiment, pressuring the safe-haven US Dollar and Japanese Yen and supporting all other currencies. Chinese Vice Premier Liu He – who leads the delegation to Washington – has agreed to meet US President Donald Trump at 18:45 GMT. Markets are seeing this as a positive development that is indicating progress. Moreover, the president stated that the talks are going very well.

The world's largest economies are discussing a currency pact to weaken the yuan and a Chinese commitment to buy more US agrifoods. On the American side, the US may be ready to lift some limitations from Huawei and refrain from new tariffs scheduled for next week. According to the latest reports, both sides are moving away from the most sensitive topics, such as forced transfer of technology and intellectual property. That has been Beijing's stated aim earlier in the week – and Washington may go along despite Trump's desire to see a comprehensive accord. 

The Chinese delegation has been more cautious, and talks may still break down. It is essential to remember that earlier in the week. The US blacklisted 28 Chinese companies and limited visas for several Chinese officials. Moreover, the administration is still considering curbing Chinese investments. A new article in the New York Times – detailing some of these ideas – has served as a reminder of the delicate relations. 

Brexit, consumer confidence, and central banks

Trade headlines are set to dominate trading, and also Brexit talks are eyed. UK Prime Minister Boris Johnson and his Irish counterpart met on Thursday and announced that there is a pathway for a deal. GBP/USD surged, and the optimism also supports the euro. The eurozone is also set to suffer in a no-deal scenario, and an accord is a positive development. The EU and the UK continue negotiating in Brussels. 

Markets will also follow the preliminary read of Consumer Sentiment by the University of Michigan. Trade tensions have had a limited impact on consumer confidence, but any change may impact the Federal Reserve. 

See US Michigan Consumer Sentiment Preview: Concerns about the future are driving the decline in sentiment

Loretta Mester, President of the Cleveland branch of the Federal Reserve, expressed concerns about the weak investment. Mester is a hawk, and her worries raise the chances that the Fed cuts rates later this month. Eric Rosengren, her colleague at the Boston Fed, speaks later today.

In the old continent, no substantial economic indicators are due out today, but the row about the European Central Bank's restart of its bond-buying scheme continues. Dovish members of the ECB have come out to defend President Mario Draghi's decision after hawks have criticized the move. Both sides seem to be trying to impact the bank under Christine Lagarde, which takes over from Draghi on November 1. 

More ECB QE has diminishing effects, but don't expect a EUR/USD rally

EUR/USD Technical Analysis

EUR USD technical analysis October 11 2019

EUR/USD bulls are in control. The currency pair now tops the 50, 100, and 200 Simple Moving Averages on the four-hour chart, momentum remains positive, and the Relative Strength Index (RSI) remains below the 70 level – thus not indicating overbought conditions.

Thursday's high of 1.1033 is the immediate resistance line. The mid-September high of 1.1075 follows it, and then by 1.1115, which capped the pair earlier last month. Higher above, 1.1165 is the level to watch. 

Looking down, the 1.10 level turns into support. It had capped EUR/USD four times earlier in October. The next level to watch is 1.0965, which provided support earlier this week. The weekly low of 1.0940 provides support, and it is followed by 1.0905 and 1.0879. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD nears weekly highs as risk-on returns

The EUR/USD pair was dragged higher by a soaring Pound, now hovering around 1.1040. The market is all about sentiment, and this last dependent on Brexit and the US-China trade relationship.

 

EUR/USD News

GBP/USD surges to 5-month highs on reports of a draft Brexit deal

GBP/USD has leaped toward 1.28, hitting the highest since May. Reports suggest that the UK and the EU are zooming in on a deal. Details are awaited and negotiations continue.

GBP/USD News

USD/JPY in search of a firm direction, stuck in a range below mid-108.00s

The prevalent risk-on mood weighed on the JPY’s safe-haven status and extended support. A sharp fall in the US bond yields undermined the USD and failed to impress bullish traders.

USD/JPY News

Cryptos: Incumbents don't know to play well

The Libra project led by Facebook remains on track despite the first defections. Those who have abandoned the project are mostly payment gateways. Bitcoin's lack of tone weighs on Ethereum's mood.

Read more

Gold slumps to $1,480 area on Brexit hopes

The troy ounce of the precious metal continued to weaken in USD terms in the American trading hours as markets cheered reports claiming that the European Union (EU) and the United Kingdom (UK) are closing in on a draft Brexit deal that could be announced before the end of the day on Tuesday.

Gold News

Forex Majors

Cryptocurrencies

Signatures