Movement on the euro-dollar exchange rate was limited in yesterday’s trading. EURUSD opened at 1.1076 and traded lower to test support around the weekly open price at 1.1052. From there it found enough bids to close the day at 1.1071, 5 pips shy of where it opened.
The European Central Bank’s (ECB) Financial Stability Review was the only report released from Europe yesterday. It reveals that the central bank is concerned about the consequences of the region’s loose monetary policy as it encourages excessive risk-taking.
Across the Atlantic, the Federal Open Market Committee (FOMC), which is the interest rate decision-making body of the Federal Reserve, released the minutes of their most recent meeting. It revealed that Fed officials found it necessary to cut rates two consecutive times. They highlighted the risks to global growth and uncertainties that are brought about by the ongoing trade war. However, policymakers feel that there is no need to cut rates as long as economic data do not veer away from targets that could force them to re-assess their position.
ECB Meeting Minutes Due Today
Later today, at 12:30 pm GMT, it will be the ECB’s turn to release the minutes of their last meeting. On October 24, ECB President Mario Draghi did not announce any changes to the central bank’s interest rate at -0.50% and its quantitative easing program. He also revealed that the US-China trade war and Brexit weighed on the region’s manufacturing. This was his last meeting as ECB president.
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EURUSD Outlook
If the minutes reveal that the ECB has no plans of further easing monetary policy, we could see the euro push past resistance at 1.1080. A strong bullish close above this level will mean that the next resistance for buyers to clear will be 1.1174. This is where the currency pair establish highs in October 18, October 30, and November 1.
On the other hand, it will be bearish for the euro if the minutes show that central bank is open to further easing. A close below yesterday’s low at 1.1052 could trigger a sell-off all the way down to support around the 1.1000 psychological handle.Download our latest quarterly market outlook for our longer-term trade ideas.
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