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Euro and US Dollar:

  • Brexit talks continue at EU Summit.
  • FOMC minutes may give a guide to the Fed’s thinking for 2019.

We have just released our Brand New Q4 Trading Forecasts including USD and EUR.

EURUSD Looks Heavy and May Fall Further

The release of the latest FOMC minutes later today should give us a clue to the Fed’s thinking for interest rates and the economy for 2019. With a December 0.25% interest rate hike already priced into the market, Fed Chair Powell’s statement will be carefully parsed for his thoughts on inflation and the trajectory of rate hikes in 2019. Powell’s commentary will especially interesting considering the latest outburst from US President Trump who complained that the US rates are being hiked too fast.

On the other side of the pair, the eagerly-awaited EU Summit starts with no-deal in sight. Over the past two-three weeks, expectations have grown that a framework of a deal may be announced this week but that now seems to be off the table as the Irish border impasse has yet to be resolved. Both sides are refusing to budge on their position over a border backstop and talk is growing of a no-deal Brexit, although this may just be negotiating tactics.

EURUSD is looking technically weak in the short-term with the four-hour chart showing five lower highs in a row. The pair also trade in-between the 20-and 50-day moving average and remain firmly below the 200-day ma. A break below the 50-day ma at 1.15414 exposes 1.15081 ahead of the October 9 low at 1.14322.

We will be looking at What Effect Brexit Will Have on Foreign Exchange Markets in a live chat on Thursday.

IG Client Sentiment Datashows how investors are currently 55.1% net-long EURUSD – a contrarian bearish signal – but recent daily and weekly positional shifts give us a mixed EURUSD trading bias.

EURUSD Four-Hour Price Chart (August – October 17, 2018)

EURUSD Price: Driven by Brexit and FOMC Minutes

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on EURUSD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.