FX.co ★ Analysis of EUR / USD and GBP / USD for October 17. Angela Merkel: Brexit negotiations are in the final stages.

EUR / USD

Wednesday, October 16, ended for the EUR / USD pair with an increase of 40 basis points and reaching the level of 38.2% Fibonacci. Thus, the chances that the rising wave a has completed its construction have grown significantly. An unsuccessful attempt to break through the 38.2% level will indicate that the currency market is ready to move quotes away from the highs reached within the framework of the proposed wave b. At the same time, the instrument still shows readiness to build an upward set of waves. The only thing that can prevent him from reaching this is the news background, which remains ambiguous for the Euro currency.

Fundamental component:

The fundamental background for the EUR / USD pair remains weak and ambiguous. The inflation report for September was released in the European Union yesterday. The markets expected to see 0.9% y / y, but the consumer price index managed to decline even more in the first month of autumn, to 0.8% y / y. Oddly enough, but the pressure on the euro in connection with this weak report has not begun. However, it was formed on the dollar when it became known about the decline in retail sales in America in September by 0.3%, instead of an increase of 0.3%. Thus, the markets selectively took into consideration the economic data of the past day. Today, there will be nothing interesting in the European Union, while in America, there will be a report on the change in industrial production in September. If it turns out that the reduction will be more than 0.1%, this can help the euro-dollar pair to make a breakthrough of the 38.2% Fibonacci level.

Purchase goals:

1.1083 - 38.2% Fibonacci

1.1145 - 50.0% Fibonacci

Sales goals:

1.0879 - 0.0% Fibonacci

General conclusions and recommendations:

The euro-dollar pair continues to build a new upward set of waves. An unsuccessful attempt to break the level of 1.1083 may lead to a departure of quotes from the reached highs and the construction of wave b. On the contrary, a successful attempt will show the intention of the markets to continue to buy the instrument with targets located near the calculated level of 1.1145, which corresponds to 50.0% Fibonacci.

GBP / USD

On October 16, GBP / USD gained another 50 basis points and does not stop growing. The instrument also made a successful attempt to break through the 100.0% Fibonacci level, indicating an intention to continue the increase. It is assumed that the pound-dollar instrument is part of the third wave of the upward trend, which may end today or tomorrow (with an unfavorable news background), or turn out to be very long if the UK and the EU, nevertheless, diverge at the end of the month.

Fundamental component:

The information that Chancellor Angela Merkel shared with the markets could not go unnoticed. According to Merkel, negotiations are in the final stages, and an agreement with London can be signed today. The same opinion is shared by French President Emmanuel Macron. Thus, literally in the last week, all the main faces of the Brexit process, which has been going on for more than three years, have dramatically changed their attitude towards the proposal of Boris Johnson. Either Johnson made an offer "which is impossible to refuse", or the parties still found a way to replace the "back-stop" with another mechanism. In any case, there is no detailed information on this issue and the markets can only guess why the rhetoric of the presidents of France, Germany, Ireland, the European Council, Michel Barnier has changed dramatically. However, the main thing is that he has changed, and Brexit can finally take place and end. At least the markets believe in it, and thanks to this, the pound continues to grow.

Sales goals:

1.2191 - 0.0% Fibonacci

Purchase goals:

1.2817 - 100.0% Fibonacci

1.2986 - 127.2% Fibonacci

General conclusions and recommendations:

The pound / dollar instrument continues to build an upward trend. Since the EU summit begins today, market activity may increase several times, but everything will depend on the nature of the data received from this summit. Thus, today, you can expect a few hundred points up, and the same down. Based on this, I recommend refraining from opening deals on the instrument today, since no one can predict what decisions will be made at the summit.