The euro Brexit’s affirmed support last week again. The daily indicators are recovering and about to turn bullish.
The oversold daily RSI and the bullish turnaround of the weekly oscillator should limit the legroom in the coming days.
Rather than focus on Brexit’s outcome, the next logical step should be to look at the election on December 12th, UK General election.
- The recent IHA Markit services PMI suggested that the sector flatlines in October as the index posts at 50.0 no-change mark (October 49.5).
- According to the official release, “The latest figure was among the lowest registered in the past ten-and-a-half years, and below each of the trend levels for the first, second and third quarters of 2019 (50.1, 50.5 and 50.5 respectively).
- The euro cross has failed to capitalize on the BOE’s dovish tone last week. Following the release of the Bank of England’s monetary policy decision last week the pound took a beating across the board except for EUR, The Monetary Policy Committee has voted by a majority of 7-2 to maintain Bank Rate at 0.75%. The market read the tone of the MPC was dovish.
Moody’s Analytics said, “This was the first split vote since June 2018, suggesting that the Bank of England’s next move will be a cut rather than a hike.”
- Overnight’s 1st estimate of UK 3Q GDP was estimated to have increased by 0.3% in 3Q (July to Sept) 2019, according to the official release.
This week’s economic calendar is also a little higher. We will focus on the September Average earnings index (Tue) and UK CPI(Wed).
Capped by 20MA (Weekly)
The euro cross failed to gain footing above the 20MA, and the resistance zone located between 0.8660-0.8675 levels. Support at 50MA (Monthly) at 0.8550 has held firm in recent weeks keeping momentum in a narrow range; however, rallied has been sold as long as 0.8660-0.8675 is resistance zone.
The daily and weekly indicators suggest lower prices in the near term, and we watch around 0.8550,0.8470 and 0.8450 levels. The market must take out key support at 0.8450 to set the scene for a retracement towards 0.8300.
On the upside, the market needs to take out the mid-October high at 0.8675 to confirm the near-term trend once again. If you are long, I think that would be a signal to add.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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