23.10.201803:15 Forex Analysis & Reviews: Fundamental analysis of EUR/USD for October 23, 2018

EUR/USD has been quite impressive with the recent bearish pressure which engulfed the previous impulsive bullish trend, leading the price below 1.15 with a daily close. As of the recent Italy budget deficit problem, the euro struggled to maintain gains despite the strong bullish momentum it had before the last week's close.

While Italy is refusing to back down on the budget deficit in response to EU of its 2019 spending plans, the market interpreted the information in a dovish manner. However, the government of Italy does not take it as a negative side as they claim that the economic growth is better than expected and structural deficit target may be revised. Still, this fact put the euro under pressure. Today the German PPI report is going to be published which is expected to be unchanged at 0.3% and the Consumer Confidence is also expected to be unchanged at -3. Ahead of the ECB President Draghi's speech this Friday, certain volatility may exist in the market throughout the week for the euro.

On the other hand, the Fed is currently looking forward to another rate hike in the coming week which will lead the interest rate to 2.50% from the current value of 2.25%. Despite the recent argues with President Trump, the interest rate hike may lead to certain gains but in the longer term it is expected to slow down the economic growth in a multiple way. Ahead of the Core Durable Goods Orders and Final GDP estimates, today the Richmond Manufacturing Index report is going to be published which is expected to decrease to 25 from the previous figure of 29 and FOMC Member Bostic is going to speak today about the interest rate decision and future monetary policy which is expected to have the hawkish outcome.

As of the current scenario, EUR may struggle further to gain momentum against USD having certain fundamental difficulties in the process. If USD manages to perform better than expected amid the upcoming economic reports, further impulsive bearish pressure is expected in the pair which will lead to more downward momentum in the coming days.

Now let us take a look at the technical view. The price has breached below 1.15 area with confluence to the dynamic level of 20 EMA recently which is expected to lead to further bearish pressure in the pair. Currently the price is expected to retrace higher a bit towards 1.15 area before it starts to push lower with target towards 1.1430 and later towards 1.1300 area in the future. As the price remains below 1.15 area, the bearish bias is expected to continue.

SUPPORT: 1.1300, 1.1430

RESISTANCE: 1.1500, 1.1600

BIAS: BEARISH

MOMENTUM: VOLATILE