EURUSD analysis 18.09.2020

The single currency, the euro, fluctuated in a narrow range sloping to an upside during the Asian session, to witness its rebound for the second consecutive session from the lowest since August 12 against the US dollar on the cusp of economic developments and data expected on Friday by the economies of the eurozone and the US economy the world.

At 06:39 AM GMT, the euro pair rose against the US dollar by 0.03% to 1.1852 levels, compared to opening levels at 1.1848, after the pair achieved its highest level during the session's trading at 1.1862, while it reached its lowest level at 1.1843.

The markets are currently looking forward by the largest economy in the euro area, Germany, to the release of the producer price index reading, which is a preliminary indicator of inflationary pressures, which may show stability at zero levels against a growth of 0.2% last July, and this comes before we witness the disclosure of the current account reading of economies. The euro area as a whole, which may explain the contraction of the surplus to a value of 12.0 billion euros, compared to 20.7 billion euros last June.

Other than that, we followed yesterday the chief negotiator of the European Union for the Brexit file, Michel Barnier, that the coming days will be decisive for the exit negotiations, explaining that the British proposals regarding fisheries give a ray of hope, but they are not sufficient, and that the draft domestic market law in Britain It will make the EU's stance tougher, resurrecting that Brussels still hopes for a trade agreement with London.

It is noteworthy that the negotiations to reformulate future relations between the United Kingdom and the European Union are in a state of stumbling in the wake of Britain's intention to bypass international law by violating the withdrawal agreement it reached with the Union, which provides for the demarcation of the border between England and Northern Ireland, due to the latter's refusal to leave the European Union. The European customs, which Britain seeks to overcome, arguing that it will not allow the division of the United Kingdom.

On the other hand, investors in the US economy are awaiting the release of the current account reading, which may reflect the widening of the deficit to $ 158 billion compared to $ 104 billion in the first quarter, before we witness the release of the leading indicators reading, which may reflect a slowdown in growth to 1.3% versus 1.4%. In July, coinciding with the disclosure of the preliminary reading of the University of Michigan Consumer Confidence Index, which may show an expansion to 75.0 versus 74.1 in August.

This comes hours after the expiry of the FOMC meeting on September 15-16, during which interest rates were kept between zero and 0.25%, the program to purchase Treasury bonds by $ 80 billion per month and mortgage bonds by $ 40. At least monthly, and the disclosure at the time of the expectations of members of the Federal Commission for growth rates, inflation and unemployment in addition to the future of interest rates for the next three years.

In the same context, last Wednesday, we followed the press conference held by Federal Reserve Governor Jerome Powell after the end of the meeting to comment on the decisions and directions of the committee, which included expectations to remain the leader at zero levels until at least 2023, in which he expressed the importance of the fiscal stimulus policy to support The economy is confirming the Federal Reserve’s commitment to using all its tools to support the recovery.

Technical analysis

The euro versus dollar provided noticeable positive trades, surpassing the SMA 50, and we note that the rally stopped at the resistance of the bearish intraday channel that appears in the image, in conjunction with the emergence of clear overbought signs through the stochastic indicator, which supports the chances of a rebound to the downside to resume the bearish corrective trend.

Therefore, we expect to witness negative trading today, awaiting a visit to 1.1720 as a next major stop, bearing in mind that breaching 1.1870 will stop the expected decline and stimulate the price to achieve additional gains targeting a test of 1.1910 and then 1.2011 levels as initial positive targets.

The expected trading range for today is between 1.1750 support and 1.1910 resistance.

The expected general trend for today: Bearish.