ECB to Drive the EUR/USD

EUR/USD Analysis 21 October 2018

EUR/USD Spot Price: 1.1512

Support - 1.1450, 1.1400, 1.1300

Resistance - 1.1600, 1.1738, 1.1800

Trade Ideas - The EUR/USD is Weak

  • Position: Short
  • Entry Point: 1.1600
  • Stop Loss: 1.1675
  • Take Profit: 1.1450

I want to get short at 1.1600 with a stop loss at 1.1675 and a profit target of 1.1450.

2018-10-21-eurusd-trade-ideas

EUR/USD 240 min Chart - EUR/USD is Weak

ECB Meeting in Focus

The EUR/USD continues to get pushed around by the fate of the USD and that has been very clear in the last week.

A hawkish FED minutes really spurred on the USD and that left the EUR/USD and many of the majors under pressure. The talk coming out of the FOMC was that the path of rate hikes is certain to continue.

That means we will see another hike in December and two in 2019. That is on top of the September rise that we have just witnessed.

All that means the USD will continue to appreciate as the higher yields available in the US will cause money to continue to flow in. We are also seeing US bond yields rise which is making the case for hikes even stronger.

No one is expecting any change to policy at the meeting of the ECB and the dovish tone will remain intact.

Meanwhile, the US economy keeps on ticking along strongly thanks to US President’s tax cuts. All the talk from Wall Street recently has been around the strength of the US economy. It’s another reason the EUR/USD is under pressure.

Key Economic Data

While most of the attention will be on the ECB minutes, we really haven’t seen any new developments here for some time. Draghi remains dovish and I feel we aren’t going to see anything change until he leaves in 2019.

The other big news item of the week will be US GDP. The number will be revised lower, but at 3.3% we are still seeing some really strong growth. So much so that there are some suggesting inflation could get out of hand and it is another reason that the USD is so strong at the moment.

Technical Levels

The EUR/USD has been following the technical levels almost to the pip this week. 1.1600 is now major resistance and support at 1.1450 will take some stopping.

If we do break 1.1450 then the 1.1300 swing low comes into play. If we get a very dovish ECB or a strong beat in US GDP then that might very well be on the cards.

2018-10-21-eurusd-key-levels

EUR/USD - Key Levels

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