EURO FALLS AS INVESTOR CONFIDENCE SLUMPS
The sterling remained higher than the US dollar as traders hoped that progress will be made on Brexit. Last week, the Brexit minister was quoted saying that a deal would be made in the final week of the month. While he later backtracked from these statements, many investors believed him. Today, data from the country showed that new car registrations had declined for the second straight month. This was mostly attributed to the new emissions standards that have made automobiles more expensive. At the same time, data on UK’s service sector PMI declined to the lowest level in seven months.
The euro fell against the USD ahead of tomorrow’s mid-terms in the United States. The EUR/USD pair reached an intraday low of 1.1364. This was the lowest level since Wednesday last week. The data from the EU also contributed to the slide. The investor confidence numbers from the region showed that consumer confidence was declining. Data from Sentix showed that confidence was at 52.2, which was lower than the expected 53.3. The previously-released data showed confidence at 53.9. Today’s number was the lowest it has been since 2016.
The price of crude oil remained low today as sanctions on Iran kicked off. These sanctions were as a result of the decision by the Trump administration to leave the Joint Comprehensive Plan for Action (JCPOA). In an interview yesterday, Mike Pompeo said that the new sanctions will be bigger than the previous ones. However, the administration announced that a number of countries will be granted waivers to continue buying crude oil from Iran. The new sanctions matter because Iran is the third largest oil exporter in the European Union.
On Friday last week, the EUR/USD dropped sharply after the release of the US jobs numbers. The pair dropped from a previous high of 1.1455 to a low of 1.1310. Today, the pair dropped below Friday’s low and reached an intraday low of 1.1364. On the thirty-minute chart, the pair’s 15 and 30-day EMA show that the pair could continue the downward momentum. This is confirmed by the RSI, which is currently at 35 and headed lower.
The GBP/USD pair started an upward momentum last week. Since then, it has risen from a low of 1.2693 to a high of 1.3040. This was the highest since October 24. Today, it moved higher but failed to reach the previous high of 1.3040. The momentum indicator moved above the 100 level. On the hourly chart, the pair is forming a symmetrical triangle pattern, an indicator that consolidation is taking place. This will likely lead to a breakout in either direction.
The price of WTI crude oil remained subdued today as traders continued to focus on the Iranian sanctions. It reached an intraday low of 62.35. This was the lowest level since April this year. The double EMA shows that the pair will likely continue moving lower. However, the Bears Power indicator shows that the bears are starting to exit their bearish trades. Therefore, there is a likelihood that the XTI/USD pair will start moving higher. If it does, it will test the important 63 level.