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EUR / USD remains under pressure

The pair EUR / USD completed trading on Tuesday with a decrease of more than 0.5%. Such a strong decline in the currency pair was unexpected for many traders, as in Europe there was no important economic news that could put pressure on the European currency. The main drivers of the decline in quotes were Brexit news and pressure from the US currency (the dollar index yesterday set a new maximum for more than 2 weeks of trading).

Michel Barnier, EU’s chief negotiator, said yesterday that he seriously underestimated the consequences of Britain’s withdrawal from the EU. After ratification of the Brexit agreement, it may take years to build new partnerships. Losses will be borne by both sides. “No one was able to explain to me the benefits of Brexit,” said Barnier.

According to the results of yesterday, the American dollar strengthened against all G7 currencies, with the exception of the Australian dollar (AUD / USD + 0.15%) and the pound sterling (GBP / USD + 0.05%). The main support to the dollar was provided by positive data on the PMI of the non-manufacturing sector from ISM. In October, the figure rose from 52.6 to 54.7 points.

Today in Europe it is worth paying attention to the publication of the report on retail sales. In the United States, among the most significant events on the economic calendar are the speeches of FOMC members Patrick Harker and John Williams.

On the chart, after the breakdown of the level of 1.1105, the currency pair went down to around 1.1065. We do not see a strong reaction to this level, therefore, before the formation of the correctional movement, we can expect an update of yesterday's low.

Resistance levels: 1.1110, 1.1140, 1.1180.

Support levels: 1.1065, 1.1045, 1.1000

The main scenario is a correction to 1.1110 and a decline to 1.1045.

An alternative scenario is a decline to 1.1045 from current levels.

At the moment, a neutral news background has been formed on the market. A downward trend prevails on the chart, so within the day we give preference to shorts that are worth looking for near the level of 1.1110.

 

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