At the end of last week, major currencies showed an increase, with the exception of the Canadian dollar. The largest increase against the US dollar was shown by the Japanese yen (+1.33%). The New Zealand dollar went up by 1.09%, the Australian dollar - by 0.87%, the euro - by 0.23%, the British pound - by 0.31% and the Swiss franc - by 0.04%. The Canadian dollar fell 0.62%.
On Friday, the euro fell from 1.1610 to 1.1535. Its fall was facilitated by the overall strengthening of the US dollar, as well as an increase in the yield of US government bonds. Also, major currency pairs tugged on the Canadian dollar against a decline in oil prices and the pound.
News on Brexit, namely, reports that PM May would not agree to Britain's permanent membership in the customs union, also put pressure on GBP.
Day's news (GMT+3):
Fig 1. EURUSD hourly chart.
Our expectations on Friday were completely justified. After the breakout of the trend line, the price quickly return to the balance line and the 45th degree. On Monday, trading opened lower on the euro. The British pound was an outsider, as negotiations between Great Britain and the EU on Brexit came to a halt.
At the time of writing, the euro sits at 1.1567. The price is below the balance line. On the 17th and 18th of October a meeting of EU leaders is set to take place during which the Italy's budget will be discussed. Today is the last day for EU member states to submit a draft budget for 2019 to the EC. Increased attention will be placed on Italy. If the Italian government refuses to compromise, the euro will again be under pressure.
The IMF representative said that Italy should respect the EU budget rules and create reserves in anticipation of slower economic growth.
On Wednesday, the US Fed will publish the minutes of the September meeting on monetary policy, following which the regulator raised the rate for the third time this year. According to the forecast, I am waiting for the drop to 1.1476 by the opening of the European session on Tuesday. Today, my target is 1.1505/10.