EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair performed a fall under the correction level of 127.2% (1.1024), a reversal in favor of the European currency and resumed the growth process in the direction of the Fibo level of 100.0% (1.1106). A new trend channel with an "up" direction has been formed. It was from the bottom line that the rebound was made yesterday. And it gives the target for the euro/dollar pair – 1.1100, which almost coincides with the correction level of 100.0%. Fixing the pair's quotes under the trend channel will work in favor of the US dollar and the beginning of a new stage of the fall of the euro currency.
In just a few minutes, the report on inflation in the European Union for September will be released. However, nothing particularly positive can be expected from this report. It is unlikely that inflation in September will exceed the value of 1.0%, which will mean an acceleration, but one that is not even worth paying attention to. Most analytical agencies agree that inflation will not change and will be 0.9% y/y. Every month, traders can see a figure of + 0.2%. Given the presence of a new trend channel, we can assume that a value below 0.9% inflation can be a great help to bear traders with a close under its lower line. But the value of 1.0% – 1.1% can, on the contrary, allow to reach the correction level of 100.0%.
In the afternoon, a report on retail sales will be released in America, which from my point of view is less significant and interesting. The fact is that the indicator of retail sales very much depends on the season, holidays, the general economic situation and other factors. That is, for example, a decline in sales growth does not necessarily mean a negative trend or a deterioration in the economy. In one month, sales growth of 0.3% may follow, in another – 0.5%. Both values indicate an increase in sales. Thus, even if the final value for September will be below the projected +0.3%, it is unlikely to harm the US currency. Only a very strong slowdown in the growth rate can cause the growth of the euro/dollar pair.
Well, separately, I would like to note that the activity of traders on the EUR/USD pair remains frankly low, since much more important and significant events are taking place on the stage now. This, of course, is about Brexit and the summit of the European Union beginning tomorrow. Therefore, traders are now much more actively trading the GBP/USD pair, and in the coming days, they can devote even more time and energy to the pound.
What to expect from the euro/dollar currency pair today?
On October 16, traders are also likely to continue unhurried and inactive trading inside the upward channel. Since its lower line did not let the bears go further down, I expect the pair to grow in the direction of the correction level of 100.0%. If the report from the eurozone does not witness another fall in inflation, and the report from America does not exceed the expectations of traders by 0.2% – 0.3%, then this scenario is unlikely to prevent anything. The general information background remains neutral, as topics with monetary policy of the ECB and the Fed are not on the front pages of periodicals.
The Fibo grid is based on the extremes of May 23, 2019, and June 25, 2019.
Forecast for EUR/USD and trading recommendations:
I recommend selling the pair with a target of 1.0802 if a close below 1.0918 is made. A stop-loss order above the level of 1.0927. In extreme cases – after closing quotes under the trend channel.
You can buy the pair now with the target of 1.1106 and the stop-loss level at 1.1024, however, I once again draw attention to the fact that the activity of traders on the EUR/USD pair is now low.
