The pair EUR/USD is enjoying a IFO index of business climate German slightly higher than expectations this morning (Monday).
The index is in effect remained stable for the month of October to 94.6 points, while the consensus had expected a decline to 94.5 points. In detail, it should be noted that the index of the current situation was a disappointment to 97.8 points compared to 98 points early, while the expectations index beat expectations to 91.5 points versus 91 points in advance.
In this context, the Euro regained a bit of ground after weakening yesterday. We remind that the last meeting of the ECB, chaired by Draghi has had little influence on trade.
It is, in fact, essentially the rise of the Dollar, which was to incriminate to explain the decline of the EUR/USD yesterday.
Investors have resisted the decline in the face of the durable goods orders disappointing when Markit Economics released PMI preliminary US stronger than expected.
The PMI are generally less influential as the ISM indices, but the fact that they have seen improvements in the manufacturing sector and in the services sector has been good news for the dollar.
Today, the United States, it is mainly the consumer confidence measured by the University of Michigan that traders will be watching. Economists expect an increase of the index at 96 points, after 93.2 in the previous month.
The Fed meeting will be crucial for the fate of the EUR/USD next week
For the next week, the attention is trounera to the Fed meeting which will conclude on Wednesday 30 October.
The market expects largely to a further decrease of 0.25% in the rate of Fed Funds, as shown in the barometer of the Fed funds rate Investing.com, and a confirmation may therefore have little influence on the Dollar.
However, comments from the Fed will help the investors to know whether another rate cut in the short term is possible.
If the Fed indicates by its language that this is not the case, as provided by Goldman Sachs, it will be necessary to expect a rise in the Dollar, and a decrease of the EUR/USD.
If, on the contrary, the remarks of the Fed leaves to the market the hope of a further rate cut in December or the beginning of 2020, the greenback may weaken, to the benefit of the EUR/USD pair.
Technical Analysis The Euro-Dollar
From a graphical point of view, it should be noted that the fall recorded yesterday appears to have been stopped by the support area 1.11-1.110, where the moving average 200 hours. Little below, another support is located at 1.1080.
For the moment, the upward trend of background visible since the beginning of the month therefore remains intact, and a return of the increase to the resistance of 1.1150, 1.1180 and 1.12 is still possible.
A break below 1.1080, which would correspond also to a break below the upward trend line visible since the 1st of October, would be a bearish signal important, that would attract the attention towards the next support at 1.1050, 1.1025, and the psychological threshold key 1.10.
