Forex traders received a big cache of economic data out of the Eurozone today. It showed that inflation remains absent while the economy is under-performing, but the EURUSD managed to extend its rally after the FOMC cut interest rates yesterday. It is Mario Draghi’s last day at the ECB, will a change in leadership rally the Euro or should forex traders prepare for sell-off? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
The US Dollar is under selling pressure against the Euro, despite Fed Chief Powell stating that a pause in the interest rate cut cycle is next. Economic data out of the US continues to show a weakening economy and forex traders will get key personal income and spending data today as well as the Chicago PMI. How will this influence price action in the EURUSD? Today’s fundamental analysis will take a look at the upside potential as well as downside risk in this currency pair.
Here are the key factors to keep in mind today for Euro trades:
- German Retail Sales: German Retail Sales for September increased by 0.1% monthly and by 3.4% annualized. Economists predicted an increase of 0.2% monthly and of 3.4% annualized. Forex traders can compare this to German Retail Sales for August which decreased by 0.1% monthly and which increased by 3.1% annualized.
- French CPI: The Preliminary French CPI for October decreased by 0.1% monthly and increased by 0.7% annualized. Economists predicted an increase of 0.1% monthly and of 1.0% annualized. Forex traders can compare this to the French CPI for September which decreased by 0.3% monthly and which increased by 0.9% annualized. The French Harmonized CPI for October decreased by 0.1% monthly and increased by 0.9% annualized. Economists predicted a decrease of 0.3% monthly and an increase of 1.0% annualized. Forex traders can compare this to the French Harmonized CPI for September which decreased by 0.4% monthly and which increased by 1.1% annualized.
- Spanish GDP: The Preliminary Spanish GDP for the third-quarter increased by 0.4% quarterly and by 2.0% annualized. Economists predicted an increase of 0.4% and of 1.9%. Forex traders can compare this to the Spanish GDP for the second-quarter which increased by 0.4% quarterly and by 2.0% annualized.
- Italian Unemployment Rate: The Italian Unemployment Rate for September was reported at 9.9%. Economists predicted a figure of 9.6%. Forex traders can compare this to the Italian Unemployment Rate for August which was reported at 9.6%.
- Spanish Current Account: The Spanish Current Account for August was at €3.32B. Economists predicted a figure of -€0.04B. Forex traders can compare this to the Spanish Current Account for July which was reported at €3.24B.
- Italian CPI: The Preliminary Italian CPI for October was reported flat at 0.0% monthly and increased by 0.3% annualized. Economists predicted a decrease of 0.1% and an increase of 0.2%. Forex traders can compare this to the Italian CPI for September which decreased by 0.6% monthly and which increased by 0.3% annualized. The Preliminary Italian Harmonized Italian CPI for October increased by 0.2% monthly and by 0.2% annualized. Economists predicted an increase of 0.2% and of 0.2%. Forex traders can compare this to the Italian Harmonized Italian CPI for September which increased by 1.4% monthly and by 0.2% annualized.
- Eurozone CPI: The Eurozone CPI for October increased by 0.7% annualized and the Eurozone Core CPI increased by 1.1% annualized. Economists predicted an increase of 0.7% annualized and of 1.0% annualized. Forex traders can compare this to the Eurozone CPI for September which increased by 0.8% annualized and to the Eurozone Core CPI which increased by 1.0% annualized.
- Eurozone GDP: The preliminary Eurozone GDP for the third-quarter increased by 0.2% quarterly and by 1.1% annualized. Economists predicted an increase of 0.1% and of 1.1%. Forex traders can compare this to the Eurozone GDP for the second-quarter which increased by 0.2% quarterly and by 1.2% annualized.
- Eurozone Unemployment Rate: The Eurozone Unemployment Rate for September was reported at 7.5%. Economists predicted a figure of 7.4%. Forex traders can compare this to the Eurozone Unemployment Rate for August which was reported at 7.5%.
- Italian GDP: The Preliminary Italian GDP for the third-quarter increased by 0.1% quarterly and by 0.3% annualized. Economists predicted a decrease of 0.1% and an increase of 0.2%. Forex traders can compare this to the Italian GDP for the second-quarter which increased by 0.1% quarterly and which decreased by 0.1% annualized.
Here are the key factors to keep in mind today for US Dollar trades:
- US Personal Income and Personal Spending: US Personal Income for September is predicted to increase by 0.3% monthly and Personal Spending is predicted to increase by 0.2% monthly. Forex traders can compare this to Personal Income for August which increased by 0.4% monthly and to Personal Spending which increased by 0.1% monthly. Real Personal Spending for September is predicted to increase by 0.2% monthly. Forex traders can compare this to Real Personal Spending for August which increased by 0.1% monthly. The PCE Deflator for September is predicted to increase by 0.1% monthly and by 1.7% annualized. Forex traders can compare this to the PCE Deflator for August which increased by 0.1% monthly and by 1.8% annualized. The PCE Core Deflator for September is predicted flat at 0.0% monthly and to increase by 1.4% annualized. Forex traders can compare this to the PCE Core Deflator for August which was reported flat at 0.0% monthly and which increased by 1.4% annualized.
- US Initial Jobless Claims and Continuing Claims: US Initial Jobless Claims for the week of October 26th are predicted at 215K and US Continuing Claims for the week of October 19th are predicted at 1,679K. Forex traders can compare this to US Initial Jobless Claims for the week of October 19th which were reported at 212K and to US Continuing Claims for the week of October 12th which were reported at 1,682K.
- US Employment Cost Index: The US Employment Cost Index for the third-quarter is predicted to increase by 0.7% quarterly. Forex traders can compare this to the US Employment Cost Index for the second-quarter which increased by 0.6% quarterly.
- US Chicago PMI: The US Chicago PMI for October is predicted at 48.0. Forex traders can compare this to the US Chicago PMI for September which was reported at 47.1.
Should price action for the EURUSD remain inside the or breakout above the 1.1125 to 1.1210 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.1170
- Take Profit Zone: 1.1350 – 1.1410
- Stop Loss Level: 1.1100
Should price action for the EURUSD breakdown below 1.1125 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.1085
- Take Profit Zone: 1.0905 – 1.0975
- Stop Loss Level: 1.1125
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