EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair performed a consolidation under the correction level of 50.0% (1.1030). Thus, the process of falling quotations can be continued in the direction of the next Fibo level of 61.8% (1.0995). Today, a bullish divergence is brewing in the CCI indicator. The divergence is not very strong and given the direction of the trend channel, it is corrective. Thus, I do not expect strong growth of quotations during today, although the closing of the euro/dollar pair above the level of 50.0% will work in favor of the EU currency and some growth.
The current week promises to be not too interesting in terms of information background. Any events concerning the euro/dollar pair will be only on Wednesday. In the first two days, traders can continue inactive trading. On Wednesday, the first data from the European Union and America will begin to arrive. Of course, one of the most significant reports overall, the US consumer price index, will generate the most interest. Traders do not expect inflation to change at the end of October compared to the previous month. The greater the chances of growth in the activity of the forex market, as a change in the inflation rate is quite possible. It is difficult to say whether inflation will accelerate in October or slow further. The second option is negative for the dollar and will cause the closure of the pair's sales. The first option, as they say, will be "on trend". Also on this day, a report will be released on industrial production in the European Union, which will decline after the German, almost with a 100% guarantee, and German inflation, which at best will not show another slowdown and will remain at the level of 1.1% y/y. As we can see, even according to preliminary estimates, the euro has no special chances for strong growth, the maximum is a correction.
On Wednesday and Thursday, Fed Chairman Jerome Powell will deliver a speech, but these events may not cause any reaction at all. The Fed meeting was just recently, in the general opinion, the Fed will take a break in the short-term cycle of lowering rates, so no one expects any special changes in the US monetary policy in the coming months. Accordingly, the rhetoric of the Fed chairman is unlikely to change or will contain frankly "dovish" notes. The report on changes in GDP in the eurozone will cause much greater interest. Let me remind you that the European Commission lowered its forecasts for GDP and inflation for the next three years, so each report on GDP could potentially be worse than the previous one.
On Friday, we will expect reports on industrial production and retail sales in America and inflation in the European Union. Inflation in the EU will not show another slowdown again, retail sales – not the most important report, and industrial production in America may show a decline in October. As you can see, the fall of the US currency can be expected only by the end of the week.
Forecast for GBP/USD and trading recommendations:
On November 11, traders are likely to close part of the sales of the European currency near the correction level of 50.0% to work out the bullish divergence of the CCI indicator. At the same time, I do not expect strong growth in the euro currency, as I do not expect the high activity of the forex market on this day. Below the level of 50.0%, the pair is in sales with a target of 1.0995 and a stop-loss order above the correction level of 50.0%.
The Fibo grid is based on the extremes of October 1, 2019, and October 21, 2019.
