EURUSD moved back above 1.1000 yesterday as the US dollar took a breather after its strong run over the past few sessions. US economic data came in close to expectations and there was little of interest out of the Eurozone, so the action was probably due to profit taking.
Today we will get the September Consumer Price Index out of the US. Last month’s update showed the headline rate increasing 1% annually but base effects could push that up substantially this time around, perhaps as high as 1.5%. Meanwhile, the core figure should reach 2.4%. These numbers will further lock in a December rate hike and support the US dollar.
Thursday’s ECB meeting will the next flash point for EURUSD. There won’t be any change to the policy setting but the tone of the post-meeting statement and Mario Draghi’s press conference are likely to have a moderate impact.
Management and risk description
From an Elliott Wave perspective, the euro is interpreted to be undergoing its next “swing trade” to the downside; within a wave (d) decline toward the mid 1.0600s area (see weekly charts below).
Whilst from a classical charting standpoint, the euro still has a Descending Triangle target of 1.0895 (refer daily chart below).
Resistance now lies around the mid 1.1000s area and at 1.1100/1.1125 max.
Entry: EURUSD is today seen as a sell around the 1.1040 level.
Time horizon: Allow several days at least.
EURUSD daily chart (click to expand)
EURUSD weekly chart (click to expand)
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— Edited by Susan McDonald
Non-independent investment research disclaimer applies. Read more