EUR/USD Daily Forecast – Euro Attempts Recovery From Support

Light Economic Calendar Could Lead to Range

EUR/USD pared gains last week as it became clear that the United Kingdom will not be leaving the EU by the stipulated October 31 deadline.

The focus in the early week will be how the UK proceeds. It appears the EU is willing to grant an extension but will state that further negotiations will not take place.

UK’s PM Boris Johnson will still push for an election which might keep a bit of pressure on both the pound and euro.

Fed Meets later this week

The Federal Reserve will meet later in the week and is highly expected to cut the interest rate yet again. The markets have fully priced in a cut this week and are pricing in a roughly 1 in 5 chance of another cut by the end of the year.

The latest US jobs report will come out on Friday. There is some potential to see EUR/USD fall into a range considering that these market-moving events are scheduled in the second half of the week.

Technical Analysis

EUR/USD found some buyers at 1.1072 which is a level that acted as support in July and August and resistance in September.

A rising trendline from the October low broke down during the decline last week and is currently being retested. Beyond this, the current recovery might see a further hurdle at the 1.1100 handle followed by 1.1129.

At this stage, there isn’t enough evidence that the pair has reverted back to the bullish trend that has taken place for the majority of the month. It might take a push back above for that to happen 1.1129.

Bottom Line

• EUR/USD is catching a bounce from support at 1.1072. This level stands to keep the pair higher in the session ahead.
• The economic calendar is light today and volatility is likely to rise in the second half of the week.
• Ongoing Brexit developments stand to impact the pair, particularly if the UK decides to have an election.