Wednesday, November 21, 2018

EUR/USD - 21 November 2018


Fundamental Highlights

The Euro falls lower after failing to break above the 1.1470 resistance. The failure to break above this level is attributed to the strengthening of the US Dollar as investors shift away from high beta currencies such as the Euro towards risk averse currencies such as the US Dollar. The US Dollar also pushed higher due to the better than expected US housing figures with Building Permits printing at 1.263M versus 1.260M and Housing Starts printing at 1.228M versus 1.225M. Additionally, the Euro is being pressured lower as the budget plan disagreement between the EU and Italy’s government continues. For today, investors will need to focus on what will be said when the European Commission publishes its opinion on the budget plan drafts of all the 19 countries sharing the euro. Note that the focus will obviously need to be on Italy’s budget plan and to what extent will Italy incur fines from the EU if they proceeded with the controversial budget plan.
For today, the focus will remain on the US Dollar as some important US housing figures will be released later during the day. However, investors need to also keep an eye for any material news related to the disagreement between the EU and the Italian government in regards to Italy’s proposed budget plan for 2019.

Technical Analysis

After breaking below the 1.1400 support level, prices bounced off the 50-period moving average and failed to fall towards 1.1320. The general bias of the pair remains bearish given that prices are trading below the 200-period moving average. However, confirmation of a further drop in prices will only come after a break below the 50-period moving average at 1.1358. The break below the 50-period moving average will expose the 1.1320 support level.

Support: 1.1358 / 1.1320
Resistance: 1.1430 / 1.1503

Chart (H4)