eurusd
The European Central Bank may have decided to watch to see the performance of stimulus measures taken in September before deciding on further monetary policy adjustments. This is the consensus among analysts after the ECB released the minutes of its October 2019 meeting.
The pair continues to trade around the key price level of 1.10655, which served as the neckline of the most recent double top seen in October and early November 2019.
Takeaways from the minutes are as follows:
“Economic data raised questions as to whether weakness would continue for longer than anticipated in September…”wide agreement that more info needed to reassess inflation outlook, impact of ECB measures.”
“Measures should be allowed more time to unfold…”, the minutes read.
Key data on the Eurozone in the form of the manufacturing and services PMIs from Germany and France will hit the markets tomorrow. Therefore, I feel that price action may be at a critical juncture.
A decisive break of the 1.10655 price area will enable the EURUSD make a push towards the 1.11023 price area (August 20 and September 13 highs), with further possibility of a push all the way to the October/November double tops at 1.11667. Support for such a price move will come from better than expected surveys of business conditions in the manufacturing and services sectors in Germany and France.
On the flip side, disappointing PMI data could cause the former neckline to give in to downside pressure, which brings price to the 1.09332 price level (Sep 11 and Nov 14 lows). 1.09482 is also a possibility if the data are extremely disappointing.
The EURUSD will therefore look for direction from tomorrow’s three-pronged data release.