The euro and pound strengthened against the US dollar on news that US buyers cut their spending in September. The good news on Brexit has also encouraged traders to take risks. Weak retail sales are a bad sign for the US economy, which may show more subdued growth amid a broad slowdown in the global economy. But the further movement of the pound up depends entirely on how the Democratic Union Party of Great Britain (DUP) behaves.

EURUSD

According to a report by the Commerce Department, US retail sales in September this year fell immediately by 0.3% compared with the previous month. Excluding automobiles, retail sales fell by 0.1% in September. Economists had expected sales in September to show a 0.2% increase over the previous month. Weak consumer spending is directly correlated with rising trade tension, which puts pressure on the entire global economy, which pushes consumers away from big expenses.

Inventories in the US in August remained unchanged. A report from the US Department of Commerce indicated that inventories were unchanged, while economists had expected them to grow by 0.2% in August compared to July. The ratio of stocks/sales in August was 1.40, as in July.

Traders ignored the report that the indicator of housing sentiment in the US in October of this year increased slightly, indicating a recovery in activity in the housing sector, in which certain problems were observed. Lower interest rates in the United States revived this industry. The report of the National Association of Housing Builders indicated that the housing market index in October 2019 rose to 71 points against 68 points in September. Economists had expected the index to remain unchanged in October.

Yesterday, a report of the International Monetary Fund was published in which economists unanimously announced that large economies should prepare for coordinated action in the event of a strong decline in world GDP. An emphasis was also placed on the budget of developed countries, which could suffer due to low inflation and negative interest rates. Most likely, we were talking about the eurozone. The report also noted risks to financial stability that could worsen if economic growth slows down. In this part, the speech was already about the United States.

Yesterday, news that China began to fulfill its trade obligations and returned to the purchase of agricultural products, also supported the demand for risky assets. In a statement, Donald Trump said that reports that China will not begin to purchase agricultural products until an agreement is signed are incorrect since the celestial authorities have already started buying agricultural products three weeks ago.

Pressure on the dollar was formed after the next statement by the representative of the Fed. In an interview with Chicago Federal Reserve Bank President Charles Evans on Wednesday, he did not rule out the possibility of lowering interest rates for the third time this year. Evans said that the Fed's policy is well defined now, which helps to support inflation growth, as well as helping to strengthen GDP, which should grow by more than 2.0%. Concerning risks, the head of the Chicago Fed expects continued tensions in trade negotiations.

The technical picture in the EURUSD pair remains on the side of buyers of risky assets, but much will depend on today's Brexit news. If EU leaders agree to the agreement proposed by Boris Johnson, and most likely it will be so, then the whole emphasis will be shifted to parliamentary discussion and voting on this issue.

Only the breakthrough of large resistance in the area of 1.1090 will provide the market with a new influx of buyers who can continue the growth of EURUSD to new monthly highs in the area of 1.1120 and 1.1160. In the case of pressure on the euro, in the scenario of no further progress on Brexit, support can be expected at the lower border of the channel – 1.1025, as well as at a larger minimum of 1.0995.

GBPUSD

The further movement of the pound up entirely depends on how the Democratic Union Party of Great Britain (DUP) behaves. Already this morning, the pound fell from its highs after the published statement of the head of the DUP Arlene Foster that the deal could not be supported in its current form. "In the current situation, we cannot support the option of a deal that is proposed in terms of customs issues, as well as the lack of clarity on VAT," Foster said. However, the hope of the bulls remains, as the DUP noted that they will continue to work with the UK government to conclude a reasonable deal that will suit Northern Ireland, allowing it to protect its economy, as well as preserve the constitutional integrity of the United Kingdom.

From a technical point of view, it is best to return to buying in the GBPUSD pair after the correction to the supports of 1.2750 and 1.2670. With a larger pressure on the trading instrument, the bulls will show themselves only after the update of the lows of 1.2600 and 1.2530. If progress is made in negotiations between the UK government and the DUP party, a break in the resistance of 1.2835 could provide an influx of new buyers looking to update the highs around 1.2920 and 1.3040.