The US Economic Reports Are in the Focus. A Trading Idea for EURUSD
The financial markets participants have taken a wait-and-see attitude before the release of important statistics on the US economy. Today, the reports on the inflation and retail sales will be released today at 12:30 (GMT).
This week, the protocols of the last FOMC meeting were published. Most Fed's officials believe that another increase of the key interest rates in 2017 will be appropriate. Nevertheless, the Central Bank is concerned about the low level of consumer prices in the country. Some Fed's officials believe that they will need to slow down the interest rate increase, if the inflation doesnt get to the target level. At the moment, the probability of the monetary policy tightening this December is at the 86.7% level, which is quite high.
A quite optimistic statistics on the US economy was published yesterday. It provided additional support for the US currency. The manufacturing price index increased by 0.4% in September. This mark has met the market expectations. If today's reports are optimistic, the demand for the US dollar may grow significantly.
Lets look at the technical pattern on the EUR/USD pair
Support levels: 1.18200, 1.17750, 1.17000
Resistance levels: 1.18500, 1.18750
A classic technical analysis pattern called Head and shoulders is in the process of forming now. It is a strong reversal formation. I dont exclude emergence of a bearish sentiment on the EUR/USD currency pair.
The technical pattern on the H1 timeframe also indicates the downward trend development. Bearish Engulfing, a classic Price Action pattern, was formed near the 1.18500 resistance level. The MACD histogram is the confirming signal. The indicator has begun to decrease and has moved to the negative zone. I recommend opening short positions.
You may sell EUR/USD, if the price fixes below 1.18200. The target for taking profit is the 1.17750 mark. GBP/USD may reach the 1.17000 round level in the medium term. Use a trailing stop for this position.