EURUSD Corrects From Two-Month Highs, France Business Climate Disappoints

EURUSD corrects below two month-highs giving up 0.01% at 1.1024 as the Brexit optimism fades away after the UK Parliament voted Johnson’s Brexit plan but rejected the timetable to take UK out of EU. Earlier today France Business Climate came in at 99, below expectations of 102 for October. US macro data released yesterday came mixed as the Richmond Fed index beat expectations while the existing home sales figures disappointed.

ECB believes that interest rates are near the effective lows, leaving little room for additional cuts. The manufacturing data in Europe and Germany are at extreme lows so we can’t rule out a rebound. On the other hand traders believe that the Fed will cut interest rates by 25 bp in the October meeting

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EURUSD Resistance and Support

EURUSD continues lower for third consecutive session correcting from two-month highs as the momentum turns neutral after the pair breached below the 100-day moving average. On the technical side the common currency made an impressive rebound from two-year lows at 1.0878 up to 1.1179 amid support that risk assets found on better news from Brexit and US-China one trade deal.

On the downside, important support stands at 1.1115 daily low, a break below will attract more sellers to join the action and drive the price down to 1.1064 the low from October 17th. Next strong support stands at 1.1034 the 50-day moving average.  This is the next target for bears that could be attained on a convincing downside break of the 1.1064 critical support. On the upside, immediate resistance stands at 1.1134 the 100-ddday moving average, a break above can lead prices up to 1.1179 the two-month highs. Long positions can sit comfortably as long as the pair trades above 1.11.

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