EUR/USD: Probing 100-day average, focus on Brexit

EUR/USD is currently trading just below the 100-day moving average (MA) of 1.1137, having invalidated a bearish lower highs setup with a convincing close above 1.1110 on Thursday.

The pair rallied by 0.48% on Thursday on the news that the UK and European Union's negotiating teams (EU) have reached a Brexit withdrawal agreement.

The rally, however, stalled near the 100-day MA in the overnight trade, possibly due to fears that the agreement could be rejected by the UK parliament.

After all, Prime Minister Johnson will face a deeply divided parliament on Saturday, where the opposition will try to delay the deal and another referendum. Further, Johnson's Brexit agreement has been rejected by the Nothern Irish ally – the Democratic Unionist Party.

Put simply, the odds of the UK parliament approving the latest Brexit deal are quite low. The uncertainty will likely keep the EUR below the 100-day MA.

Also, the equities will likely remain under pressure due to the dismal China data, keeping the EUR bulls from pushing the pair above the long-term average.  The official data released in the Asian session showed China's economy grew 6.0% from a year ago in the third quarter – the lowest in at least 27.5 years, according to Reuters records.

Both Pound and the EUR would pick up a strong bid if the DUP softens its stance ahead of Super Saturday. In that case, the EUR/USD may close above the 100-day MA resistance for the first time since July 18.

The European data calendar is light with just the Eurozone's current account figures for August, scheduled for release at 08:00. The current account seldom triggers big moves in the EUR pairs.  

Technical levels