Today was expected to be a quiet day since the economic data is very light during the European session while the US and Canada are off for Veterans/Remembrance Day. But, the market has other things in its head and, as you can see from the main charts, we have had quite some action in forex and in other financial markets today. The US Dollar got beaten up about a week ago before and during the US midterm elections and it was in limbo between that time and the FOMC statement release on Thursday evening.

But, the statement was more or less unchanged while the market was expecting a slightly dovish statement. So, the market got relieved that the FED will still keep the hawkish stance and it started turning on the USD again, with the USD closing last week near the highs. Today, the buck started the day in a similar fashion, opening with a small bullish gap and pushing higher.

The other two major issues still remain in forex. Judging by the comments today, we can conclude that Italian politicians are not going to reduce the deficit for next year’s budget, while the Brexit deal still seems far while the time is ticking, hence the big bearish move in the GBP today.

The European Session

• BOE’s Broadbent – Bank of England board member Broadbent said early this morning that there are signs of weaker economic growth and business investment which is a result of Brexit. Although, wages keep going higher he said, which is true. Although, it will all depend on the Brexit outcome and he is right about all the points.
• ECB’s De Guindos – The Vice President of the European Central Bank said in a press conference that the downside risks have become more prominent but external demand is the main reason for the economic slowdown because the consumption remains quite upbeat.
• No Brexit Deal Yet for Barnier – The EU chief Brexit negotiator was speaking to the 27 EU Ministers today saying that a deal is not reached yet. He didn’t sound too optimistic, despite more optimistic tones from Brits.
• No Date For EU Brexit Summit – Bloomberg posted a piece saying that EU ministers are said to have failed to agree on a date for a Brexit summit this month. They need more clarity from the UK, but Theresa May is failing to champion a proposal in the British Parliament.
• Juncker on US Tariffs – The European Commission President Juncker said that the EU and US are in a truce until year-end. He added that the EU is working to avoid escalations and he will meet trump at G20. I think Trump will go ahead with tariffs on European cars.
• Ireland Not Happy With Brexit – Irish Foreign Secretary Simon Coveney commented earlier that Brexit negotiation teams are working intensively, but more work still needs to be done. It seems like the EU is not going to give any concessions to Theresa May.
• Italians Don’t back Down on Budget – According to Prime Minister’s office, Italy politicians won’t meet to revise the budget for 2019 today. Vice PM Di Maio added that it is a suicide respecting EU’s limits on budget deficit. This will intensify in the coming days and it will weigh on the Euro.
• Positive Comments Form Theresa May’s Office – Theresa May’s spokesperson said that the cabinet has backed the Prime Minister and he expects them to continue to do so. Nothing suggests that ministers are thinking about resigning but there are still substantial issues on the Irish backstop.

The US Session

• Task Giving A Deadline to May – According to The Sun, EU’s Donald Tusk has told the UK that the deadline for the EU Brexit summit is this Wednesday. But, it seems that the UK is giving up on that deadline, so it will have to be postponed for December now. That would require Article 50 to be postponed as well by a month or two.
• Bank Holiday in North America – Or as the Yankees like to call it, a long weekend. Today is Veterans/Remembrance Day in US and Canada so those markets are closed. I expect the price action in forex to start dying out as Europe heads towards the end of the session.
• FOMC Member Daly Speaks – FED San Francisco President Mary Daly is speaking at a conference in Eastern Idaho. Her speech might not move the markets but she will be taking questions which might spark some moves, although don’t bet on it.

Trades in Sight

Bullish EUR/GBP

1. This pair has been on a bearish trend in the last two weeks
2. The retrace up is complete
3. The 50 SMA is providing resistance

A bearish reversal is expected now

We opened a sell forex signal in EUR/GBP a while ago as this pair was retracing higher. EUR/GBP has turned really bearish in the last two weeks as the Brexit deal seems to get further away. In the last few sessions though, we saw a pullback higher which now is complete as the stochastic indicator is already overbought on the H4 chart. Besides that, the 50 SMA (yellow) which has acted as support previously is providing resistance at the top now. So, the technical analysis is pointing down for this pair and the fundamentals don’t look promising for the GBP, so we are on the right direction.

In Conclusion

The European session is coming to an end and the US is closed today, so the price action has already calmed down considerably. The Euro and the GBP are bound to get even more bearish in the coming days as Brexit and the situation with the Italian budget seem to be far from a solution, so we will see if we can get a few trades in these EUR/USD and GBP/USD during this time.