EUR analysis 28.01.2020

The euro currency fluctuated in a narrow range tilted to the upside during the Asian session to witness its rebound to the second session from the lowest since December 2 against the US dollar on the cusp of developments and economic data expected today by the third largest economies of the euro area Spain and the American economy, which includes Recorded interview for FOMC member and New York Fed Chairman John Williams.

At exactly 05:34 AM GMT, the euro pair rose against the US dollar by 0.03% to 1.1022 levels compared to the opening levels at 1.1019, after the pair achieved its highest level during the trading session at 1.1025, while achieving the lowest at 1.1017.

The markets are looking to the Spanish economy to reveal the unemployment rate index, which may show an increase to 14.0% compared to 13.9% in the third quarter. Otherwise, we followed yesterday, the European Union's chief negotiator, Michel Barnier, expressed his view that the risks of Britain’s exit file from The European Union, and in particular the future relations between the United Kingdom and the European Union countries, after Britain leaves the Union next Friday.

In the same context, the European Union's chief negotiator, Barnier, stated that the risks of the European Union not reaching a trade agreement with Britain before the end of this year 2020 are that negotiations on Britain's departure to the European single market and the European Customs Union are optional by the two parties, as we also followed yesterday, the Prime Minister also expressed The Irishman, Leo Faradkar, says he also finds it difficult to reach a commercial agreement between the United Kingdom by the end of this year.

On the level, investors are currently watching by the US economy to disclose the reading of the durable goods orders index, which represents about half of consumer spending, which represents more than two-thirds of the gross domestic product in the United States, which may reflect a rise of 1.2% compared to a decline of 2.1% in November In the past, the core reading of the same index may also show a 0.4% increase compared to a 0.1% decline in November.

This comes before we witness the disclosure of the US housing market data with the release of the seasonally adjusted reading of the S&P composite of house prices 20 which may reflect slowing growth to 0.3% compared to 0.43% in the previous monthly reading last October, while the reading may appear Annual growth in the same index accelerated to 2.5%, compared to 2.2% in October.

Up to the Federal Reserve Board member and President of the New York Federal Reserve John Williams made the opening remarks on the Puerto Rico Beach program in San Juan, via a pre-recorded video, before revealing the reading of the consumer confidence index, which may appear widening to 128.2 compared to 126.5 in December, and the Richmond Industrial Index reading, which may reflect a contraction of 3 to 5 in December.

This comes in conjunction with the start of the FOMC meeting today and tomorrow, Wednesday, in Washington, in which it is expected that the short-term benchmark interest rates for the third consecutive meeting will be maintained between 1.50% and 1.75%, and look forward to the press conference’s activities. Federal Reserve Governor Jerome Powell tomorrow, Wednesday, half an hour after the FOMC meeting ends.

Markets are also looking after tomorrow, Thursday, to disclose the initial reading of the GDP of the United States for the fourth quarter, which may show the acceleration of the pace of growth for the largest economy in the world to 2.2% compared to 2.1% in the third quarter, while the initial reading may reflect the GDP measured by prices for the quarter Last quarter, the pace of growth stabilized at 1.8%, little changed from what it was in the third quarter.

Technical analysis

The EURUSD pair did not show any strong movement in the previous sessions, to continue to fluctuate near the 1.1000 barrier, and therefore, there is no change to the bearish trend scenario that depends on stability below 1.1080 level, with a reminder that our targets start at 1.0985 and extend to 1.0880 after crossing the previous level.

On the other hand, we point out that the price has completed forming a head and shoulders pattern in advance, which supports the chances of the continuation of the expected bearish wave for the upcoming period.

The expected trading range for today is between 1.0940 support and 1.1080 resistance.

Expected trend for today: bearish.