EUR/USD Daily Forecast – Euro Struggles to Hold Above 100 DMA

EUR/USD pared gains for a second consecutive session on Tuesday after headlines indicated a Brexit deal is not likely to materialize before the October 31 deadline.
Jignesh Davda

Negative Brexit News Pushes Euro Lower

EUR/USD came under renewed pressure in late-day trading on Tuesday after UK PM Boris Johnson was delivered a defeat in parliament.

Johnson was looking to pass through an expedited timetable for finalizing the EU withdrawal bill, a crucial element of the exit process. However, he didn’t have the votes, and at this stage, it does not look like an orderly exit will happen by the October 31 deadline.

At best, the withdrawal bill could pass by next week if he gets the votes. The actual Brexit deal would still need to be voted on and the EU would have to give final approval. With new uncertainties emerging from yesterday’s vote, Sterling and the single currency have both come under some renewed pressure.

Johnson has now passed the buck onto the EU who will decide on an extension. It seems like they have two options, a technical extension to facilitate the process of passing the deal that is on the table now, or a lengthy extension which would involve an election. The former will tend to be bullish for both the euro and pound while the later could trigger a notable drop in both currencies.

Technical Analysis

Support for EUR/USD is seen near 1.1129 and has not shown a strong presence of buyers as of yet. The level carries confluence with the 100-Day moving average and could be a near-term line in the sand.

EURUSD Daily Charthttps://www.fxempire.com/markets/eur-usd/overview

It’s not surprising the pair has struggled to hold above it considering yesterday’s developments. At the same time, it’s noteworthy that the pair has contained losses generally speaking.

In this context, if the pair regains this area we could see sentiment reverse back to bullish. But ultimately it will depend on how the EU reacts as the euro is still largely impacted by Brexit developments.

While below 1.1129, the next main area of support I am looking at falls at 1.1072.

Bottom Line

  • Negative Brexit developments have weighed on the pair, driving EUR/USD below support near 1.1129.
  • While the pair has fallen below support, it has not been with conviction.
  • Further price action could offer a tell, however, further developments in Brexit talks should ultimately drive the pair.
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.