16.10.202011:09 Forex Analysis & Reviews: Analysis and forecast for EUR/USD on October 16, 2020

According to the law of the genre, all the most important and interesting things are left for the last day of trading on the main currency pair. This event will become clear when you look at the price charts. In the meantime, let's talk briefly about yesterday's events and what awaits EUR/USD today.

According to United States Treasury Secretary Steven Mnuchin, the search for a compromise to reach an agreement aimed at combating COVID-19 is still relevant and is under development. In particular, Mnuchin is going to meet again with the Speaker of the House of Representatives Nancy Pelosi and try to convince her of the need to accept the agreement before the US presidential election, which is due to take place on November 3.

If we go back to yesterday's macroeconomic data from the US, they were very ambiguous. Thus, the number of initial applications for unemployment benefits significantly exceeded the forecast value of 825,000 and amounted to 898,000. It is worth noting that the number of requests increased by 53 thousand compared to last week, and the previous figure was revised up from 840,000 to 845,000. At the same time, the Philadelphia Fed's manufacturing index showed significant growth. The indicator was 32.3, although forecasts were reduced to only 14.0.

Today, at 14:15 (London time), reports from the United States on industrial production are expected. At 14:45 (London time), a member of the Open Market Committee Williams will make a speech, and at 15:00 (London time) we will learn about inventory in US warehouses.

Daily

If we talk about the market sentiment that prevailed at yesterday's auction, then they certainly can not be called risky. Investors are concerned about the suspension of trials of a vaccine against the coronavirus pandemic and the inability of the White House administration to agree with Democrats on a stimulus package. Against this background, the demand for the US dollar increased significantly, and the EUR/USD currency pair showed a downward trend.

The doji candle, which appeared on October 14, did not confirm its reversal status, and bearish pressure led to a retest of the significant support zone of 1.1725-1.1700. Yesterday, the pair fell to 1.1688, however, it was able to rebound and end Thursday's session above 1.1700 (at 1.1706). However, the bears do not think to loosen their grip. At the time of writing this article, the euro/dollar pair is under selling pressure and is trading near 1.1695. Most likely, the euro bulls will not be able to radically change the balance of power and weekly trading on the main currency pair will end with a decline. The question is the closing price for today and the entire trading week. If it falls below 1.1700, this will be a signal for a further decline, where the nearest target will be the area of 1.1625-1.1600. As you can see, this is where the 89th exponential moving average and the lower limit of the Ichimoku indicator cloud are located.

H1

Since there are now attempts to break through a strong and important support level, I consider it risky to sell right here and now. At any time, there may be a rebound up to the area of the moving averages used: 50 MA, 89 EMA, and 200 EMA. If this actually happens, I suggest considering options for selling EUR/USD from the price zone of 1.1725-1.1750. Another reason for opening short positions on the pair will be the census of yesterday's lows at 1.1688. At the same time, the inability to break through the mark of 1.1700 and the appearance of bullish candlestick analysis patterns here will be the basis for opening buy trades. I will try to present a more detailed trading plan for EUR/USD on Monday, taking into account the end of the current weekly trading and the closing price.