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On Tuesday the 2nd of October, trading on the EURUSD pair closed down. In the US session, buyers recovered a big portion of the losses they incurred during trading in Europe. The euro is under pressure from the situation in Italy, where the government has approved a budget deficit of 2.4% for 2019. Italian Deputy Prime Minister Luigi Di Maio gave markets some respite after saying that the government has no plans to leave the EU.
Fed Chair Jerome Powell’s speech didn’t didn’t spark any serious volatility. The euro recovered to 1.1570, after which the EURUSD pair went into a correctional phase, where it has been for the last 9 hours.
Day’s news (GMT+3):
Fig 1. EURUSD hourly chart.
Current situation:
The fundamentals overpowered technical factors, which took me by surprise. Nevertheless, the bulls were able to recover their losses in the US, and further strengthened their positions in Asia.
The euro surged on the news that Italy plans to reduce its budget deficit to 2% in 2021. The news isn’t that great, because it’s still 2018. It’s easy to make promises now, and not fulfill them later.
From the 1.1505 low, the euro recovered by 67 degrees. From a technical standpoint, there’s nothing stopping this correction continuing to 1.1613 (90 degrees). There’s a resistance at this level, which is drawn from the highs of 1.1630 and 1.1625.
If today doesn’t give us any negative news about Brexit or the Italian budget, then we could see quotes rise to 1.1650 ahead of Friday’s payrolls.
