14.10.2020: USD gains upward momentum. Outlook for EUR/USD and GBP/USD

Traders expect the US dollar to resume rising at least against European currencies. The eurozone industrial production data almost met the forecast showing a decline of 7.2%. However, economists had predicted a bit smaller drop. The main reason for such figures is that the data for July was revised to -7.1% from -7.7%. Moreover, on a monthly basis the indicator should have climbed by 0.5%. However, in fact, it showed a zero rise. Notably, the eurozone industrial production has been falling for 22 months in a row. That is why market participants almost ignored the report. Apart from that, investors are also looking forward to the US producer price index data. Analysts suppose that producer prices will advance by 0.4% after a drop. If the predictions come true, the US inflation may continue rising thus approaching the Fed’s targeted level of 2.0%. Yesterday, positive inflation data led to the US dollar jump. Thus, the PPI figures may push it even higher.
Yesterday, the euro/dollar par managed to reach the support area of 1.1800/1.1830. However, later, it fixed below 1.1800 and decreased to 1.1731.
According to the trading chart, at the beginning of the European session, the price hit yesterday’s local low. However, it has not reached yet the support level of 1.1700.
The risk of a rebound will take place in the market until the euro/dollar pair fixes below 1.1690 on the four-hour chart.
In other words, sell deals could be opened below 1.1690 with the targeted level of 1.1660-1.1625.
Buy deals could be initiated after a rebound that is above 1.1755 with the target at 1.1785-1.1800.
At the same, the pound/dollar pair fixed below the psychological level of 1.3000. The resumption of the downward trend may reflect the end of the correctional movement from the level of 1.2674 to 1.3081. However, this idea could be proved only if the price fixes below 1.2845 on the four-hour chart.
On the trading chart, we can see high speculative activity caused by a flow of news about Brexit.
That is why traders are recommended to keep abreast of the latest news as any piece of information about Brexit may result in sharp swings in the market.


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