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EURUSD: euro takes a dip on Italian budget concerns


On Thursday the 27th of September, trading on the euro closed down. The euro fell significantly against the dollar amid controversy in the Italian government over the budget deficit. EURUSD fell from 1.1757 to 1.1639 (-118 pips).

US data:

  • Pending home sales (Aug): -1.8% (forecast: -0.2%, previous: -0.08%).
  • GDP annualized (Q2): 4.2% (forecast: 4.2%, previous: 4.2%).
  • Initial jobless claims (Sep 21): 214 thou. (forecast: 210 thou., previous: 202 thou.).
  • Durable goods orders (Aug): 4.5% (forecast: 1.8%, previous: -1.2%).

Day's news (GMT+3):

  • 10:55 Germany: unemployment change (Sep).
  • 11:30 UK: current account (Q2), GDP (QoQ) (Q2), total business investment (QoQ) (Q2).
  • 12:00 Eurozone: CPI (YoY) (Sep).
  • 15:30 Canada: GDP (MoM) (Jul), industrial product price (MoM) (Aug).
  • 15:30 US: personal spending (Aug), personal income (MoM) (Aug).
  • 16:45 US: Chicago Purchasing Managers' Index (Sep).
  • 23:00 US: Baker Hughes US oil rig count.

Fig 1. EURUSD hourly chart.

Current situation:

On Friday during the Asian session, buyers tried to partially win back losses against the background of an overall weakening of the dollar as part of the corrections. However, the attempt proved unsuccessful, with sellers shifting the low to 1.1632.

The dollar remains strong after the FOMC meeting and signals from the Fed on a further tightening with regard to monetary policy for 2019. According to the forecast, I expect the euro to fall to 1.1618, despite the fact that sellers have opened the way to 1.1595 (D3). Here I relied on hourly cycles. Although the price is already at 1.1628. If 157th degree doesn't hold, then the fall will continue to 1.1550. The euro will close down against the dollar just as it did yesterday, and on Monday I'll compare this movement against Friday.

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