EUR/USD Fundamental Analysis: October 18, 2018

The euro major pair was kept at the daily lows after the release of FOMC minutes yesterday. It reached a new weekly low at 1.1510 close and hovered close to it after the release of Fed minutes. On Wednesday,  the favor was in the dollar against a basket of currencies since the London trading time. Various local equities added to the political tensions and poor inflation have influenced the common currency, which in turn, benefits the US dollar. The dovish macro data has further given a bearish stand for the euro yesterday. Although the US housing data came in less-than-expected allowed some breathing in the market then the dollar continued its hawkish sentiment across the market.

By the end of the Wednesday session, the euro falls at the bottom below 1.1500 while there is another significant meeting of the EU. Consequently, the euro dropped during yesterday’s trading from the day high if 1.1580. Sellers were able to pick up momentum yesterday after the hawkish reports of the US FOMC minutes. In the economic calendar of the euro, the Wholesale Price Index at 06:00 GMT is anticipated to grow by 0.4% from 0.3%  and another report on Swiss Trade Balance for September with a forecast of 2.482 billion from 2.134 billion. Nevertheless, the low-impact data is less likely to boost trading as traders are still on the edge waiting for hints on the EU’s EcoFin meeting in Brussels.

EUR/USD Fundamental Analysis: October 22, 2018

The euro major pair bounced up after a decline as it moved towards the support level of 1.1531and closed higher on Friday. However, there is a tendency for the pair to face risk and move higher in short-term. A bullish sentiment was established in the outside-day around the level of 1.1432 on Friday, indicating the pullback has stopped from the October 16 high at 1.1622. The European Union tries to lessen the deficit on budget expansion proposal and further strengthen the common currency on Friday. The European Economic Affairs Commissioner Pierre Moscovici said tension can be lessened through constructive conversations after the recent warning letter on criticizing fiscal plans of Italy.

The pair was able to find some sufficient support near the monthly lows at the area of 1.1435-30 and rose for almost 100 pips as a major part of weekly losses. The currency was further strengthened because of the dollar but lost some momentum after the rhetorics of Atlanta Fed President Raphael Bostic. On the other hand, the market received the news on Italy with its stable outlook that puts a limit on any sudden decline.

There is not much fundamental news that could affect trading while investors look for news that could affect the currency rates amid Italy policy concerns and Brexit updates. Moody’s decision was less-than-expected of investors. Thus, a relief rally on Italian markets may take place today. In case the spread between the 10-year Italy and German yields lessened by 300 bps, this could push the euro major pair higher and break through the level of 1.1535. The resistance levels of the pair would be 1.1535, 1.1575 and 1.1600 and the support levels would be at 1.1463, 1.1432, and 1.1400.

EUR/USD Fundamental Analysis: October 26, 2018

The euro major pair has broken the level of 1.1400 and dropped to a new monthly low at 1.1355 yesterday after the ECB monetary policy meeting yesterday. They intend to keep the rates unchanged, which is not surprising after their remarks. Draghi said that he has confidence on both parties with Italy will reach an agreement and said that further stimulus is needed after inflation which will likely gain momentum by the end of the year despite weak activity. The pair was seen to have recovered for a bit during Draghi’s speech and reach as high as 1.1432 during the Asian market and headed towards 1.13. Currently, the pair is trading almost flat with a bearish tone as low as 1.1366 and declined by 0.07% on the day.

The European central bank confirmed of ending the asset purchase program in December despite the budget concerns of Italy, weak data output and Brexit deal negotiation. The euro did not pick up bid price after the Fed officials were not shaken the stock market was not shaken according to Fed vice chair, Richard Clarida, Thus, yield differentials are likely to further increase in favor of the greenback pair.

In regards to the situation of the trade war,  a risk-off investor sentiment increases after the Chinese yuan declined to new 21-month low against the dollar, chances of a trade war between the US and China worsening. As fear in the market worsens, risky assets may lose their stand on the last trading session for the week.

EUR/USD Fundamental Analysis: November 5, 2018

The euro major pair was strongly bid on Friday, taking advantage of the rising momentum because of the broad weakening of the US dollar amid lack of fundamental support but positive non-farm payrolls data. With the uncertainty caused by the US-China trade deal, the greenback was on the lead upon the opening of the trading session for the week. Most of the answers in the survey say that the Democrats will probably win back the house while the Republicans is highly likely to keep the Senate. Thus, Congress is still divided which is what the market anticipates.

The previous week ended in a downward trend following good two-way moves on Friday. It looks the price is set within the falling wedge pattern. In case of a Republican victory in both houses but it may require a fiscal stimulus while a breakout on falling wedge is still far from happening. However, a Democrat victory in both chambers may have an impact to the greenback and result to a falling wedge breakout and a change from bearish to bullish sentiment. As for today, the risk ahead by the midterm elections will probably keep the euro major pair in a flat line. 

Furthermore, the reports from ECB add more pressure after another round of a long-term refinancing operation at LTRO, which in turn will support the European banks in the December meeting. Meanwhile, the problem on Italy’s budget hasn’t yet been resolved, as wells as, concerns on big sovereign debt holdings. There is no expected major economic report, therefore, the dollar will highly depend on the technical aspect prior to the release of the US ISM non-manufacturing PMI during the US trading session.

EUR/USD Fundamental Analysis: November 7, 2018

The euro major pair is a continuous changing across the Asian market session as US midterm elections would be on headlines. A steady support was found at the level of 1.14 but continues to move up and down with elections being the US headlines. A sudden decline occurred by 70 pips in early Asian market from highs of 1.1473 to 1.1398 with the probability of Democrats taking the lead and if Democrats win, the dollar will likely bounce off from a sudden decline. As of now, the Euro major pair is trading at 1.1463, gaining 0.33% on the day.

Most of the analysts, as well as investors, expect for a split result on the election, which resulted in the probability of the house majority to push through investigations of Trump’s administration ties with Russia and financial affair while the Republican Senate is struggling to pass any new major legislation Consequently, the pair turned within the range at 1.145 and anticipated to continue trading in a slow range price action until final results are announced. On the technical analysis, it seems that the euro major pair breaks through to exit a falling wedge, changing from a bearish to a bullish trend on the daily chart. Bullish patterns are executed between the 5-day and 10-day SMA, ascending 50-, 100-, and 200-hour SMAs. Higher lows are also achieved on the hourly and 4-hour chart and indicators are leaning on a bullish sentiment.

EUR/USD Fundamental Analysis: November 9, 2018

The euro major pair has been moving steadily after the release of the FOMC report since there is a bearish pressure on both currencies. Aside from rising tensions in Europe, the hawkish sentiment remains with market expectations that adds pressure on the common currency. Various political tensions such as Brexit, tensions between Brussels and Rome are anticipated to heighten tension in the next few weeks, yet Brexit is likely to move in a sluggish pace. The issue between EU and Italy influence the spread between Italy and Germany to 300 bps. Other than that, the two major coalition partners in Italy proceeds to take action in limiting immigration that also affects the euro across markets. 

These economic events limit the progress of the euro while in the US, uncertainty has pushed investors to side on the US-dominated assents and the greenback. The EUR/USD pair grew modestly after the release of the FOMC statement and rise to 1.1409. It declines immediately and broke the previous slows. The price declined below 1.1350 during the Asian trading session as the US central bank kept the funds' rate at 2.25% to 2.00. At the same time, the recent statement remained the same from the September meeting, providing a solid bullish support. Meanwhile, the Italian bond yields yesterday night after the EU commission’s forecast saying that Italy has undergone inadequate and partial analysis.

EUR/USD Fundamental Analysis: November 13, 2018

The euro influenced the appreciation of greenback during Monday trading session with political uncertainty affecting the European market. The euro major pair dropped to 1.1239 soon after the opening of the London session in the background of tension with the Italian budget as rejected by the EU commission in the previous week. The Italian government submitted again a fiscal plan in correspondence with the EU rules and risk an economic sanction. Yet, it seems that there is no intent to change the budget. The pair is declining across the European and North American hours reaching a fresh 16-month low due to the bearish pressure from both sides of Atlantic.

Lack of progress in the Brexit negotiation adds pressure on the bearish tone to the common currency added to the Italian budget concerns. The White House also intends to reconsider auto tariffs against Europe which gives a dovish sentiment for the investors, further adding a bearish pressure to the common currency in the future. Reconsideration of tariffs on the European market despite ending it a few months after meeting between the US and Europe, which can be because of various reasons such as the global trade war and renewed Iran sanctions and criticism of “America first” in the Trump administration.

There are bids for the EUR/USD pair in Asia and an optimistic view of the renews US-China trade. Yet, the change in budget still questions the Italy that could affect the spread between the high-spend budget to the European Union today will likely increase the spread between the Italian 10-year government bond yield and its German counterpart to the recent high of 325 basis points. Om case that market expectations. If Italy submitted an unchanged budget for euro, traders can anticipate the resumption of a bearish pressure. As for the fundamental data, investors are eyeing on the German CPI data scheduled today which is expected to remain the same. However, in case it turns out positive, this could drive momentum for a relief rally on the euro major pair.

EUR/USD Fundamental Analysis: November 19, 2018

The euro major pair retreated back higher than 1.14 level after the headlines on US President said to make a trade deal. Although no agreement has been set yet, which in turn, raised risk appetite with investors and kickstart momentum across the market on Friday last week. Thus, the pair gained 200 pips from the low level of 1.1215 on Monday and closed in favor of the euro and grew by 0.81% on the day.

It has been trading close to the Friday high at 1.14 at the beginning of the Asian session as investors became heedful following the dovish comments from ed’s newly appointed vice chair, Richard Clarida, saying a global economic slowdown is important for the US economic outlook and a similar to the interview from the Fed Dallas President Robert Kaplan who sees a slowdown in China and Europe. Nevertheless, analysts see this as an acceptable risk factor given that the Fed is reliant on rate hikes while the investors reacted to the dovish rhetorics resulted in US dollar weakened.

Yet, it is unlikely for the euro to hold on the gains for long-term as headlines directed differently after a poor output from the European macro data. Despite the weakened outlook from the PPI data from Germany and PMI of Eurozone give a steady trend in medium- to long-term while analysts anticipate Fed rate hike and suggest a hawkish outlook in the future.

EUR/USD Fundamental Analysis: November 21, 2018

The euro major par declined abruptly during the US session and reached a fresh new low at 1.1359. The greenback has strengthened across the market in the last hours of trading especially equity in Wall Street paired against yen and euro and consolidated losses due to a bearish decline. Earlier, the price peaked at 1.1472, which has been the highest since November 7 but pulled back and lost momentum, resulting in a correction and lose over 100 pips. The risk-off sentiment yesterday lead the financial markets with the greenback standing strongly against the common currency as well as other main competitors

The decline is not just about the risk-off sentiment with the euro which also had its weakness that was primarily because of the tension between EU Commission and Italy on the 2019 budget. Moreover, the rhetoric by ECB’s Weidmann saying that policy normalization may take a long time.

This adds high bearish pressure on the common currency with concerns on the possible sanction for the Italian government from EU being lenient to France on budget concerns. Italy pointed out that growing out may lead to an economic slowdown that may affect the whole of Europe.

How the EU reacted may add a bearish pressure to the euro if it turns out against Italy, that could add political tension and reach new highs. However, the yields differential may decline abruptly, raising again the euro to yesterday’s high of 1.1472 if the EU becomes more dovish. As for the headlines,  there is no data to be released from the Eurozone but existing homes sales data and core durable goods from the US are scheduled today, as well as the weekly crude oil inventory.

EUR/USD Fundamental Analysis: November 26, 2018

The euro is facing various problems including political problems and negative economic data as greenback gains momentum which causes the price movement to be bearishly followed by a weaker Eurozone PMI data and decline from 1.14 to 1.1345. The trading session closed this week with chances to end the latest bullish momentum as price closes lower than the 20-day SMA in favor of the common currency.  Various trading factors continue to put pressure on the pair, reaching a 10-day low of 1.1326 during the early Asian session signaled by the drop in Friday to be the sin in ending Euro’s latest recovery rally.

The pair continues to trade range bound close to the weekly lows. Losses during the Friday session can be recovered if the spread between the Italian 10-year government bond yield and its US counterpart continues to minimize. The European Commission promoted an excessive deficit procedure against Italy after the country changed the budget proposals. Concerns on the Italian budget remains to be the main attention of investors amid the minor reduction on budget plans. On the other hand, the greenback resumes having a positive price flow as a boost in equities are anticipated to get better on holidays.

On the fundamentals, there are no major reports from the US that could have a big impact on European markets from ECB President Draghi but releases from eurozone including the German Ifo business climate, German business expectations, and current assessment data, as well as, speeches from ECB President Draghi, Praet, Coeure & Nowotny are likely to affect trading.

EUR/USD Fundamental Analysis: December 3, 2018

The euro major pair is trading close to a fresh midline at 1.1340 during the Monday session after the momentum of risk appetite after the G20 summit over the weekend that allows the broad recovery after the US and China put on hold the tariff increase for another three months as they come to an agreement again. Meanwhile, Italy has been open to negotiating budget plans which can be an obstacle for the euro bulls. 

Over the weekend, Italy’s Prime Minister Conte and European Commission’s Jean-Claude Juncker discussed the deal between Italy and the EU while investors are still uncertain about the deficit spending of Italy and growth forecast until solid data has come out. On the headlines, traders should look out for the Eurozone PMI for the month of November while a drop of the German PMI is anticipated right before it.