FX.co ★ Trading plan for EUR/USD and GBP/USD on October 26

There is nothing surprising in the fact that the pound stood still yesterday. Whatever one may say, the macroeconomic calendar was completely empty, and there was no news either. So for the most part, investors simply had nothing to focus on. But despite this, the Euro currency showed a noticeable decline. To some extent, this is due to the prolonged stagnation that lasted almost the entire past week. The euro clearly showed some activity, but the scale of fluctuations was extremely modest. The quotes invariably returned to their previous values. The market cannot stand in one place for so long. So the reason for a strong movement has been developed for a long time. The only question is why the market has moved in the direction of the euro's weakening. And this is already connected with the upcoming meeting of the Board of the European Central Bank.

By weakening the single European currency, investors have demonstrated their fears that the European regulator will once again not only leave everything as it is but will not even announce any specific plans to change the parameters of monetary policy. On the wave of the Fed's actions, such a policy does not look the best, so the skeptical attitude of investors to the euro is completely justified. And today, the trend towards its weakening may well continue under the pressure of American statistics. In particular, the housing price index in the United States should grow from 19.9% to 20.1%. At the same time, sales of new homes may increase by 1.0%. That is, it turns out to be the most pleasant combination for investors when both prices are rising and sales. If this happens, the US dollar may well strengthen its position against both the euro and the pound.

New Home Sales (United States):

The EUR/USD pair managed to break through the lower border of the side channel 1.1620/1.1669, which resulted in an impulse decline. The subsequent development of the price led to the formation of a breakout-pullback pattern relative to the previously passed flat. In this situation, stagnation is considered, but if the price is kept below the level of 1.1590, a signal to sell the euro may appear.

The GBP/USD pair rebounded from the resistance area of 1.3800/1.3830, returning the quote to the local low on October 20. The first step towards changing trading interests has been taken, but for the greatest growth in the volume of short positions, the quote needs to stay below the level of 1.3720. Otherwise, a subsequent movement along the resistance area awaits us.