EUR/USD: a new foundation exists between $1,1750 and $1,19

The euro continued to gain some ground against the dollar last week, more than 100 pips above a pivotal threshold.

On the US statistical side of things last week, traders had to deal with new weekly registrations for unemployment benefits, at 750,500 for the week of 26 October to 1 November, narrowly missing expectations. As a reminder, the survey of the private human resources firm ADP highlighted job creations in the private sector (excluding agriculture) well below expectations for last month. Also, the Fed concluded a monetary policy meeting, which unsurprisingly ended with a status quo. However, it is leaving the door open for new support measures.

On the European side, retail sales in the Euro Zone for the month of September were disappointing, contracting by 1.9% on a monthly basis, while the French trade deficit, published for the month of September, beat the consensus by contracting more than expected to -5.8 billion euros. Also, the eyes of forex traders also turned to the European Commission, which published an update of its economic forecasts. It is now forecasting a 7.9% drop in GDP for the Eurozone for this year, and a 4.1% rise next year and 2.9% in 2022. Inflation of 0.3% in 2020, 1.1% in 2021 and 1.3% in 2022. And an unemployment rate of 8.4% at the end of 2020, 9.5% at the end of 2021 and 9.0% at the end of 2022.

As of right now, the pair is trading at $1.1868.

KEY CHART ELEMENTS

The central threshold of $1.1740/$1.1745, which has prevailed since mid-summer, was regained on Thursday, quite frankly, after the high volatility recorded since last Tuesday. The EUR/USD pair has regained a working base between $1.1745 and $1.19, although no clear new direction is being asserted. Forex traders are advised not to trade the pair in the immediate future as there is no relevant charting and technical entry point.

MEDIUM TERM FORECAST

In view of the key chart factors we have mentioned, our opinion remains neutral in the medium term on the pair's exchange rate.

We will maintain this neutral view as long as pair's price is positioned between support at $1.1745 and resistance at $1.1900.