EUR/USD: forecast for November 2-8
The more hawkish than expected meeting of the Federal Reserve pulled EUR/USD down, to the new lows since the beginning of August at 1.09. The pair once again fell into trading on the monetary policy divergence between the US and Europe. Data from the euro area in the past week was mostly weak, though the flash inflation figures for October improved after declining in September.
The market is still convinced that the European Central Bank will ease its monetary policy further either in December, or early in next year. Such expectations act as a drag on the single currency capping any recovery of the EUR/USD. The pair will meet resistance at the big figures of 1.11, 1.12 and then at 1.1250.
Next week pay attention to the speech of the ECB’s president Mario Draghi on Tuesday and the European Union’s economic forecasts on Thursday. Draghi may offer new hints on the ECB’s assessment of the region’s economy and further plans. In addition, beware of the news from the United States: the Fed’s Chairwoman Janet Yellen will speak on Wednesday, while on Friday America will release nonfarm payrolls for October, and the event will surely rack the market.
Support for EUR/USD lies at 1.08 and below this point there won’t be much of the help for the euro bulls until 1.05. We prefer short positions on the euro in the current environment.