Currency Analyst since 2010

EUR/USD: outlook for October 17-21

EUR/USD has finally left 1.11/1.13 trading range and fell to test levels below 1.1000. The single currency ignored euro zone’s data releases, which turned out to be quite positive: German and the region’s ZEW economic sentiment improved, and the euro area’s industrial production expanded by 1.6% in August. Negative force pulling the Eurodollar down came from the US as the greenback was driven up by the increased December Fed’s rate hike expectations. 

On Monday the euro area will release final inflation figures for September. The European Central Bank will meet on Thursday. The meeting will draw special attention of investors after speculation that the regulator may taper its quantitative easing program by 10 billion euro a month. Earlier the ECB hinted that it may extend asset purchases beyond March 2017. The ECB president Mario Draghi and his colleagues will have to clarify the situation and their comments will bring in more volatility to the pair.

The pair breached down support line from November 2015 (1.1100), bottom of the weekly Ichimoku Cloud (1.1060) and 2016 support line (1.1040). Now these levels will act as resistance. It looks like the negative pressure on the euro is set to continue. Support is at 1.0980, 1.0925/00 ahead of 1.0820.


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