EUR/USD Technical Analysis: Amid Deepening Losses

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For eight trading sessions in a row, the price of the EUR/USD continues the downward correction, crossing the 1.1000 psychological support, which we expected in the recent technical analysis. The pair tested 1.0995 support, the lowest in one month. Uncertainty over the talks between the United States and China and tariffs on European cars continue to weigh on the euro. The pair shrugged off a 0.1% rise in Eurozone industrial production in September, while markets were expecting a decline of -0.2%, confirming that the industrial slowdown in the bloc was not as sharp as previously thought in the third quarter.

Figures on Wednesday showed that production was still falling in Germany, Spain and Italy but recovered in France, Ireland and other countries. But those data have done little to boost GDP growth forecasts in the fourth quarter.

On the US side, the Labor Department released a report showing that US consumer prices rose slightly more than expected in October. The consumer price index rose 0.4 percent in October after no change in September. Economists had expected consumer prices to rise 0.3 percent. The biggest-than-expected rise in consumer prices came with energy prices rising 2.7 percent in October after falling 1.4 percent in September.

Excluding food and energy prices, core consumer prices rose 0.2 percent in October after rising 0.1 percent in September. The modest increase in basic prices reflected higher prices for medical and recreational care as well as used cars, trucks, shelter and personal care. Compared to the same month last year, consumer prices rose 1.8 percent in October, reflecting a slight acceleration from the 1.7 percent growth in September. Meanwhile, the annual rate of growth in core consumer prices slowed to 2.3 percent in October from 2.4 percent in September.

The highlight of the testimony of the US central bank governor, Jerome Powell, was before the congressional committee, was that he central bank is likely to leave interest rates unchanged in the near future. Powell also told members of the Joint Economic Committee that the Federal Reserve will leave interest rates at their current level unless there is a fundamental change in the economic outlook. "We see the current position of monetary policy likely to remain relevant as long as the information on the economy remains broadly consistent with our view of moderate economic growth, a strong labor market and inflation near our target of 2 percent."

Powell noted that the Fed's favorable outlook partially reflected the rate cuts made by the central bank in the last three monetary policy meetings.

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According to the technical analysis of the pair: The bearish look of the EUR/USD pair has deepened with the move around and below the 1.1000 psychological support, and the next support levels will be at 1.0955 and 1.0880, which are the next bears’ targets. On the upside, we continue to insist that 1.1120 resistance will remain the strongest target for the bulls should the Euro once again gain any momentum for a correction.

As for the economic calendar data today: German GDP and French consumer prices will be announced. Then the GDP growth figure for the Eurozone. The United States will announce jobless claims, the producer price index and the second testimony of Federal Reserve Governor Jerome Powell.

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Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.