Welcome to Month 11 of this year. Most of this article is regarding EA events and technical overview for the week ahead. However, there are a few more important issues to note. The first one is an FOMC review, and market response post the Fed rate cut.
As everyone expected, the Committee decided to lower the target range for the federal funds rate to 1-1/2 to 1-1/3%.
Prior to the Fed third rate cut, the common currency already surpassed the four-month bearish channel and made a fresh high of 1.1179 the other week. Since then, the price has been consolidating in a narrow range of 100 pips.
The pair rallied more than 2.00% to around 1.1179 from 1.0878 level. For now, the price appears to be consolidating near 200MAs and waiting for fresh triggers to cross its resistance zone located between 1.1200 and 1.1230 levels. We have not seen such a significant bounce for nearly 14 months. The last significant rally for three weeks happened in August 2018.
With dollar underperformance, G10 currencies have started performing, which should continue in the near term. We initiated with bullish forecast on EURUSD since early October. A bullish trend could push the common currency towards 1.1200. Going forward, a sustained trade above 1.1200 may induce a rally towards 1.1250 its key resistance levels.
Euro area annual inflation down to 0.7%. Euro area annual inflation is expected to be 0.7% in October 2019, down from 0.8% in September according to a flash estimate from Eurostat.
Data preview: After such a full global data week, the European economic calendar will be lighter in the week beginning. The focus of the week will be events like the European Commission’s autumn economic forecast (Thu). Besides EA Services PMI due on Wednesday, German IP, and ECB Publishes Economic Bulletin on Thursday.
Stable CNH and stabilized October EA PMIs could limit the downside risks to the common currency. Better than expected industrial activity data from China amid hopes of a resolution of the trade and tariff war between the U.S. & China might provide some support for EURUSD.
As we highlighted a couple of times in our weekly articles, the risks of a new decline to supports located at 1.0925-1.0900 have eased dramatically. We may see some consolidation between 1.1250-1.1000 in EUURSD after the recent surge. We still prefer Buying the dips favors the trend.
According to the daily chart, the key resistance level is placed at 1.1180, 1.1200, and 1.1250. Flipside, significant pivotal level, which will act as crucial support, is placed at 1.1125, 1.1050, and 1.0990 levels.
Overall, we see few factors that could keep the common currency slightly in a range between 1.1000-1.1250 outperform over the coming weeks. So far traced out a double top. Wait for a retracement towards the support levels.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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