Euro Waiting on Brexit ECB Meeting and PMIs
Euro pairs will mostly likely behave the same as the GBP pairs from the Brexit vote
Share this:
Once again the major fx markets are relatively subdued today as we wait and see if there is going to be a Brexit vote by Parliament in the UK today. If the vote passes today, the most likely overcome for the Pound will be positive, while a failure to pass will most likely be negative. Therefore, if passed, the UK will have a deal in place for UK to leave the EU, but what does that mean for the Euro?
Euro pairs will mostly likely behave the same as the GBP pairs from the Brexit vote, although probably not to the same extent. If the vote gets passed, EUD/USD will have some work to do in order to move higher. After testing the lows of the descending wedge in early October, the pair has gone bid on hopes that a Brexit Deal can be reached. The pair is currently consolidating near the 50% Fibonacci retracement level from the highs on June 25th to the lows on October 1st bear 1.1135. This level sits just below the 200 Day Moving Average at 1.1206 and the descending trendline from the descending wedge near 1.1230. As the RSI is currently near Overbought conditions, bulls may look for a pullback towards the 1.1000 horizontal and psychological level to get long (as the RSI unwinds), then target a break higher towards the 1.1400 level. Below the 1.1000 support level, there is strong support near 1.0900, which is the convergence of the downward sloping trendline from the shorter-term channel from the end of June, prior lows on October 1st, and the bottom trendline from the previously mentioned descending wedge.
Source: Tradingview, FOREX.com
Let’s not forget about Draghi’s final ECB meeting on Thursday. Expectations are low for any kind of changes to the outcome of September’s meeting. Draghi will likely make his point to dissenters that the easing policy is necessary for economic stability given the European Manufacturing slowdown. However, never count Draghi out for a surprise in the Q&A! But although this is his final meeting before Christine Lagarde takes over as ECB President, he may not want to rock the boat.
Also note that Global PMIs are due out Thursday. Big misses to the downside will likely spur a selloff in Euro pairs as the Eurozone economy continues to contract.
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
AUD/USD hammered by US yields and fading RBA hike bets
US yields, dollar strength and fading RBA hike bets have combined to drive AUD/USD to fresh multi-month lows. The macro and technical bias remains bearish, although history suggests parts of the move are now reaching unusually stretched levels.
Japanese Yen Outlook: USD/JPY, GBP/JPY, AUD/JPY Setups
USD/JPY and GBP/JPY show signs of stabilising, while AUD/JPY remains vulnerable as yen crosses deliver mixed technical signals.
EUR/USD Forecast: Euro Struggles to Find Support Even After U.S. PCE Data
The euro continues to face a challenging environment in the short term. The currency has struggled to regain ground against a U.S. dollar that remains firmly supported, a dynamic reflected in EUR/USD, which has now recorded three consecutive losing sessions and a decline of roughly 0.6%.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.