Overview and Dynamics
Among the representatives of management views on the Fed raising interest rates in the United States before the end of the year is divided. In contrast to the Fed chief Janet Yellen, who believes that a rate hike in the US before the end of the year is still possible, some members of the Fed have expressed doubts about the necessity of such a step. So the Fed Daniel Tarullo in his comments yesterday CNBC noted that the economy is at the moment there is "significant uncertainty" and needed "tangible evidence" that inflation is rising to the level of 2%. Therefore, to raise rates this year, according to Daniel Tarullo, "inappropriate."
The weakness of foreign economies, especially China, have a negative impact on US producers and exporters. So rising prices in China and, therefore, inflation in September slowed. A producer price index fell by 5.9%, dropping the 43rd consecutive month. Strongly cheapened This year, the oil does not contribute to the growth of global inflation.
Later, 15:30 (GMT + 3) are expected US data on retail sales in September, with a forecast contraction of -0.1% in August. If the data are confirmed or will be worse, the EUR / USD could rise.
It is worth paying attention to rising prices for precious metals, particularly gold, which struck the key resistance levels in the area of 1168.00 - 1171.00 per ounce and returned more than half of the losses incurred from the fall in May. Gold rises in price in times of uncertainty and volatility in financial markets and low interest rates in the United States. Thus euro gold has a correlation, which is close to 93%.
The decline in production in the euro area and the weak, near zero inflation and hesitant actions against the Fed raising interest rates in the US could push the ECB to further easing of monetary policy.
Otherwise, the EUR / USD pair expects growth at least until 28 October.
With the opening of the trading day the EUR / USD broke through an important resistance level 1.1380 (EMA200 on the daily chart) and is committed to the levels of 1.1450 (highs of May), 1.1500 (EMA50 on the weekly chart). The pair is moving in an upward channel on the weekly chart, the upper limit at 1.1785 (38.2% Fibonacci level).
With the support of fundamental data and news coming from the US and the euro area, the pair could reach these levels by the end of the year. Until the end of October the most likely to find a pair of EUR / USD - near the resistance level 1.1500. If newsflow from the Eurozone will be negative, then until 22 October (meeting of the ECB interest rate), the pair is likely to remain in the range of 1.1380 (EMA200) - 1.1255 (EMA144 on the daily chart). There is also strong support level 1.1285 (23.6% Fibonacci level).
Otherwise, the pair risks to fall to the bottom line of the triangle in the levels of 1.1085, 1.1025. A break of these levels would send the pair down to the level of July and May lows 1.0800 and 1.0500 year lows.
In support of this scenario is the fact that, in view of the weak recovery of the euro area economy, China's economic slowdown, as well as risks arising delay raising interest rates in the United States, the ECB can go for further easing of monetary policy in the euro area. Then decrease the EUR / USD is more likely. Recall that the next meeting of the ECB's interest rate will be held on 22 October.
OsMA and Stochastic indicators recommended long positions on the 4-hour, daily and weekly charts.
Sell Stop 1.1360. Stop-Loss 1.1420. Take-Profit 1.1285, 1.1255
Buy Stop 1.1430. Stop-Loss 1.1360. Take-Profit 1.1450, 1.1500