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EUR/USD analysis and forecast for October 29, 2021

Relevance up to 16:00 UTC–4

As expected in yesterday’s article on EUR/USD, the growth of the single currency seemed to be the most optimal trading option. That’s exactly what happened. What led to such a significant increase in the euro? Given that the main interest rate has not changed and remained at zero, the main impact on the dynamics of the single European currency was the speech of ECB President Christine Lagarde during her press conference. What is so new that the head of the ECB said in her speech? Let’s start with inflation, the growth of which is now considered in the longer term. Inflation will remain high for a longer period than previously assumed. However, inflation is expected to decrease in 2022.

As for economic growth, according to Christine Lagarde, by the end of this year, it should exceed pandemic levels. I believe that such an optimistic statement has become one of the main factors in the growth of the single European currency. Lagarde also added that the impact of COVID-19 on the economic outlook has become noticeably weaker. Now about the tightening of the ECB’s monetary policy. According to Christine Lagarde, the reduction in the pace of buying PEPP should not be perceived as a curtailment of this program. And in general, market expectations regarding the timing of the ECB rate hike do not coincide with the monetary policy of the European Central Bank. If we return to the PEPP program, then, according to the head of the ECB, it may end in March this year. The economic outlook will become even more positive if consumer confidence grows even more.

Daily

So, as a result of yesterday’s impressive growth, trading on EUR/USD closed at 1.1682. Thus, the euro bulls managed to overcome the resistance levels of 1.1626, 1.1664, and 1.1670. Now it is necessary to stay above the last mark and complete weekly trading above it. In the event of a breakthrough of the most important and very strong level of 1.1700, with the closing of the week above this mark, the situation for subsequent growth will improve significantly. At the end of the article, the euro/dollar pair is trading with a slight decrease, rolling back to the broken levels of 1.1670 and 1.1664. If some want to take a risk and buy a pair on a rollback to the levels broken the day before, you can try to do it. On the other hand, it is too early to confirm the truth of the 1.1670 breakdown, since only one daily candle has closed above this level. For more cautious and risk-averse traders, I suggest staying out of the market today for EUR/USD, waiting for the completion of weekly trading and their closing prices, after which we will conduct a more detailed technical analysis on Monday, taking into account the completion of weekly trading.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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