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EURUSD: external forces putting pressure on the euro


Italian budget woes, US and Italian government bond yields, Brexit, and expectations of further Fed rate hikes have the Forex market on edge.  

High volatility on EURUSD persisted throughout the day. The overall strengthening of the US dollar and problems in the EU sent the euro to 1.1449.

The European Commission rejected Italy's draft budget for 2019. EU leaders said the Brexit transition period could be extended. ECB Head Mario Draghi believes that Brexit's influence on the economy will be limited. In addition, the dollar continues to receive support from the FOMC minutes published on Wednesday.

Day's news (GMT+3):

  • 11:00 Eurozone: current account n.s.a. (Aug).
  • 11:30 UK: public sector net borrowing (Sep).
  • 15:30 Canada: CPI (Sep), retail sales (Aug).
  • 17:00 US: existing home sales change (Sep).
  • 19:00 US: FOMC Member Bostic speech.
  • 19:10 UK: BOE's Governor Carney speech.
  • 20:00 US: Baker Hughes US oil rig count.

Fig 1. EURUSD hourly chart.

Current situation:

The price is bouncing through the Gann levels like a ball down the stairs. It rose from the 112th degree to 1.1527. Buyers could not immediately gain a foothold above 1.1500. In the US session, they returned to 1.1518, but were again thrown back. Then they began to close long positions, which accelerated the fall below 112 degrees, to 1.1449. The fall continued after 11 hours of correction.

The price is falling in the form of a complex wave structure. According to this, the market still has to form a downward impulse to form a double bullish divergence. If sellers demolish 1.14, then we can forget about the one divergence which formed, and prepare for the euro to weaken to 1.1370.

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