Currency Analysis Report 10-20-19...Has The Euro Finally Turned Around???
A couple of weeks ago the Euro finally breaking through the crucial, whole and psychological 1.10 level. By breaking through 1.10 level, I was expecting renewed selling pressure, with the Euro ended up closing at seven week highs this past Friday.
A big factor in the euro’s rally is due to the U.K. and the European Union reaching a deal on Brexit. UK Prime Minister Boris Johnson and EU Commission President Jean-Claude Juncker confirmed a Brexit deal has been agreed between UK and EU negotiators this past week, but now Johnson must get the deal approved by the British Parliament.
Across the Pound in the US, Production at U.S. factories fell in September by the most in five months. It’s believed that the General Motors strike caused a steep decline in auto production, which contributed to the weak factory numbers in September. Also, Retail Sales unexpectedly posted the first decline in seven months. Again, the one thing that is holding up the US economy at this point is the US consumer.
This week’s event in Europe will be another key that will determine if the Euro rally has legs or not.
During the week, the other key event will be the European Central Bank (ECB) meeting. Analysts at Wells Fargo explained that since the September meeting, economic data have if anything gotten worse but still, they do not think it will ease policy further at next week’s meeting. They see another 10bps rate cut in December.
At Wells Fargo, economists are skeptical the ECB will do much more, “as its policy capacity with typical monetary policy tools, like rate cuts and QE, are clearly running low. At present, the Eurozone is running a consolidated budget deficit of about 1%, with some countries, such as Germany, in surplus. It looks increasingly likely that any meaningful positive policy shock will need to come from the fiscal side of the equation.”
I personally was looking to short the Euro against the US dollar at this weekly supply,
but I never got the turn I was looking for on smaller timeframe as the buyers were definitely in charge.
Thus, the next zone that I'm looking at is the weekly supply just above at 1.3000, for the potential next leg down.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
