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31.10.2019 03:29 PM
EUR/USD. Inflation in the European Union slowed to 0.7%, GDP – also decreased

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Yesterday, the Federal Reserve announced its third consecutive key rate cut. Thus, the difference between the rates of the ECB and the Fed has decreased again, which gives some advantages to the European currency. However, this difference in the rigidity of the monetary policies of the European Union and America remains unequivocally in favor of the latter and favor of the US currency. Perhaps, now there are not enough fundamental reasons for the pair to update its lows every month, but this is also not enough for a confident strengthening of the euro currency. We even tend to believe that the euro/dollar pair in the coming months will be inclined to a wide "sideways" since now neither the Fed nor the ECB is no longer waiting for changes in monetary policy in the coming months. And the next meetings of the central banks will be held only in December.

Today, the euro could continue to grow if macroeconomic statistics from the European Union for the first time in a long time were encouraging, and start to fall, in the opposite case. As a result, the two most interesting reports turned out to be quite contradictory and can be interpreted as you like. Unexpectedly, for many, inflation accelerated in October (non-final value) to 1.1% y/y, but this is the so-called base value. "Normal" inflation, which everyone pays attention to in the first place, fell to 0.7% y/y. In the case of GDP in the third quarter, compared to the same period last year, the increase was 1.1% y/y, which is less than the previous value of +1.2%. In quarterly terms, the increase was +0.2% with a lower forecast of +1.1%. And both of these values are also preliminary. Thus, formally, we can state the continued deterioration of the macroeconomic indicators of the eurozone. And if so, then the chances of the euro currency to continue to grow against the US dollar are reduced again. In the afternoon, data on changes in the volume of spending and income of the American population for September will be published, but these indicators, like the Chicago PMI, are secondary.

For the euro, the level of 1.1180 (the previous local maximum) is now extremely important. If the bulls manage to overcome it, it will be a good help to continue the upward movement, which, however, again, is unlikely to continue for too long if traders are not supported by a positive fundamental background from Europe or a negative one from overseas. If the bulls fail to overcome this level, even from a technical point of view, it will be more preferable for the pair to move downward. Recall that most of the macroeconomic reports yesterday were ignored by the market, although overall macroeconomic statistics from the States yesterday was quite good. Thus, the reason for the pair's growth last night is only one – the Fed's rate cut. Now that the markets have worked out this information, it is time to return to the original trading strategy and the initial location of the pair. And this is being inside the Ichimoku cloud with the prospect of forming a downward trend. However, even if traders do return to this plan, we recommend to seriously consider selling the pair not earlier than crossing the Senkou Span B line.

Pilih timeframe
5
mnt
15
mnt
30
mnt
1
jam
4
jam
1
hari
1
minggu
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