19 Oct

EUR/USD Consolidating: Elections are Two Weeks Away

October 19, 2020

Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForex

On Monday, October 19th, the major currency pair is moving rather slow not far from 1.1706. Earlier, the American currency got significantly weaker due to the statistics published by the USA last Friday. In addition to that, the key highlight of the year, the presidential elections in the USA, is only two weeks away and it’s going to be very exciting and emotional. In this light, the major currency pair is consolidating.

The statistics from the USA showed that the Retail Sales skyrocketed by 1.9% m/m in September although it was expected to add only 0.7% m/m. The Core Retail Sales also went up and added 1.5% m/m, which is better than expected (+0.4% m/m). Such strong numbers show much better support to the country’s economy from consumers than was expected earlier. Moreover, they indicate that the situation in the employment sector is more stable than it seems.

At the same time, quick growth in the number of new COVID-19 cases in the USA and everywhere around the globe prevents analysts from giving long-term outlooks for different macroeconomic indicators in general and the GDP in particular.

In two weeks, the USA is going to elect the President and that’s what is keeping the USD in suspense.

In the H4 chart, EUR/USD has completed the ascending correctional wave at 1.1740; right now, it is falling to break 1.1684 and may later continue trading downwards to reach 1.1625 and even the short-term target at 1.1584. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is no longer moving inside the histogram area, thus allowing the asset to form the correction. Later, the line is expected to get back inside the area. If it happens, the instrument may boost its decline on the price chart.

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As we can see in the H1 chart, after completing the descending impulse towards 1.1712, EUR/USD is consolidating around this level. Possibly, the pair may break the range to the downside and reach 1.1684. After that, the instrument may form another consolidation range and also break it to the downside to continue the downtrend. From the technical point of view, this scenario is confirmed by Stochastic Oscillator: its signal line is moving below 50, thus implying further downtrend.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.


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