The EUR/USD currency pair appears to be holding firm above the yearly lows of 1.1300 achieved in mid-August 2018. The pair has been on a downward trending sequence of lower highs and lower lows in recent trading sessions following the short-term rebound witnessed two weeks ago.
The EUR/USD pair’s recent rebounds have been followed by pullbacks that have pushed it below the previous low and judging by the current trendline, this is going to happen again. The big question now is whether the next rebound will occur at the current level, where the pair is holding just above the YTD-low of 1.1300, or whether it will touch those lows as demonstrated on the 4-hourly chart.
Technical Analysis
Form a technical perspective, the EUR/USD currency pair made a micro-rebound on the 4-hourly chart bouncing from 1.1345 level depicted by (S1) before hitting the current downward trending resistance at just under 1.1400 level (R1).
Now, the pair seems to be on the downward movement again heading towards (S1), but if the current bearish momentum is maintained, then it won’t be surprising to see the pair trade well below 1.1345. This could trigger a retest of the current yearly lows at 1.1300.
However, should the EUR/USD exchange rate defy the overwhelming short-term bearish odds and instead continue to rally upwards, then the bulls can begin to anticipate opportunities at 1.1475 (R2), resulting in profits of more than 75 pips or 1.1520 for profits of nearly 100 pips.
The strength of the current support zone also indicates that there is more room up top than there is down below, which suggests that the bulls could win the battle in the intermediate as the shorts rush to cover.
In the daily chart below, it further demonstrates why intermediate traders could be looking to target opportunities at (R1) at around the 1.1600 key level, which is about 216 pips above the current exchange rate level.
The major support zone, which can be found between the 1.1350-1.1390 levels appears to be holding firm for now, but that could also change with more positivity from USD catalysts including the upcoming economic data and non-farm Payrolls later this week.
The EUR/USD currency pair appears to be forming a sideways trading channels demonstrated by the resistance and support zones above but depending on the upcoming economic events in the U.S. and the Euro Zone, the outlook could change significantly beginning next week and potentially through December 2018.
Fundamental Analysis
As the month of October ends and going to November, a series of economic events will be taking place this week that could impact the greenback and the Euro.
The USD can expect catalysts at the end of the week when the non-farm payroll numbers are announced. The U.S. labor market has been very impressive in recent months with the unemployment rate falling to new lows.
Scheduled on Friday, November 2, the U.S. jobs report is expected to add 191,000 new jobs to the US economy following September’s addition of 134,000 jobs. And while the actuals missed estimates last month, analysts are optimistic that the October 2018 report could beat expectations.
In addition, this report also coincides with the climax of the U.S. earnings season with more tech stocks (Apple (AAPL) and Facebook (FB)) expected to report Q3, 2018 earnings results following last week’s announcements (Amazon (AMZN) and Google (GOOG)). And while the stock market has been recently trending downwards despite some positive earnings results, the US dollar index has remained steady suggesting that the general economic outlook remains positive.
During November, there will also be major political events in the US as the mid-term elections draw close. This could shake the EUR/USD currency pair as well depending on market sentiment towards the political climate.
One the other hand, the EU will be gearing up for the publication of the flash inflation figures on Wednesday mid-morning 10.00 AM GMT. Analysts expect the consumer price index for October to rise by 2.1%, unchanged from last month (September 2018). However, the core figure, which excludes volatility is expected to edge up to 1.0% from 0.9% reported in the previous month.
In addition, the EU will publish flash GDP data for the third quarter of 2018 on Tuesday while Germany, France, Italy and Spain will also be producing their own CPI reports throughout the week.
Conclusion
In summary, the EUR/USD currency pair appears to be holding firm just above the current YTD low of 1.1301. However, with so many economic events lined up this week, a lot could change significantly, and this presents an interesting scenario for both short-term and long-term traders to look forward to.
