EUR/USD: Eurodollar Grows Amid Weakening Dollar

EUR/USD: Eurodollar Grows Amid Weakening Dollar

At the beginning of the European session on Wednesday, the EUR/USD pair was trading near 1.0980, and at the beginning of the European session on Thursday it was already above the short-term resistance level of 1.1015 (???200 on the 4-hour chart).

At the beginning of the month, the pair reached a minimum since June 2017 near the level of 1.0880. However, in the future, the direction of movement of EUR/USD has changed. On Thursday, Eurodollar is growing for the second day in a row amid a weakening dollar.

Fed protocols published on Wednesday did not provide clear guidance on monetary policy prospects, but weak data from the manufacturing sector and other signs of a slowdown in the US economy gave rise to market expectations of a new cut in the Fed’s key rate in October.

The US Dollar Index is falling on Thursday, while maintaining a long-term positive trend. At the start of the European session, DXY dollar index futures are trading near 98.48, 25 pips below the opening price of today’s trading day.

Traders are waiting for US data on consumer inflation and unemployment benefits to be released at 12:30 (GMT).

They are unlikely to support the dollar, as inflation remains restrained. According to the forecast Consumer Price Index (CPI) in September increased by 0.1% compared with the previous month, as a month earlier. Base CPI rose 0.2%.

Bloomberg reported Wednesday that China is ready to conclude a partial agreement. This renewed investor optimism that the United States and China would nevertheless conclude a trade agreement soon or come to an armistice. It also contributes to dollar sales.

It is also worth paying attention to the publication at 11:30 (GMT) of the minutes from the September meeting of the ECB. As a result of this meeting, the ECB announced the restart of the quantitative easing program. Minutes of the meeting may also contain hints of further easing of monetary policy, which will be a negative signal for the euro.

Despite the current growth, in general, the long-term negative dynamics of EUR/USD remains, which speaks in favor of sales of this currency pair.

A good position is selling EUR/USD from current values and from the resistance level of 1.1040 (EMA50 on the daily chart).

In an alternative scenario and in case of further growth and breakdown of the short-term resistance level, 1.1040 EUR/USD will go towards the resistance levels of 1.1090, 1.1115 (September highs, May – April lows). Growth above this resistance level is unlikely.

Below the key resistance levels 1.1160 (???144 on the daily chart), 1.1210 (???200 on the daily chart) a long-term bearish trend remains.

Support Levels: 1.1015, 1.1000, 1.0970, 1.0900, 1.0850

Resistance Levels: 1.1040, 1.1090, 1.1115

Trading Recommendations

Sell by market, Sell Stop 1.1010. Stop-Loss 1.1055. Take-Profit 1.0970, 1.0900, 1.0850, 1.0800

Buy Stop 1.1055. Stop-Loss 1.1000. Take-Profit 1.1090, 1.1115