Euro Dips On Catalan Independence Vote
MaiMarFX | Oct 02, 2017 05:52AM ET
We welcome you to a new trading week and a new trading month.
The euro trended lower after a contentious vote in Catalonia on whether to split from Spain. Two million Catalans backed independence in a vote which the Spanish government regards as unconstitutional and illegal. The vote was marred by violence, with at least 844 people injured in police raids. While a declaration of independence would have no legal force, the country’s constitutional crisis indicates a historic challenge to the authority of the Spanish government. The euro slipped towards 1.1750 as the Catalan situation poses a threat to Spain which is currently the EU’s fifth largest national economy.
EUR/USD
While we currently still see the chances in favor of a small relief rally towards 1.19, the fundamental situation in the EU overshadowed the bullish bias. From a technical perspective, traders should however focus on the big picture. The euro faces a crucial support at 1.17/1.1680 and if the single currency falls significantly below that support level, we may see further losses towards 1.15.
GBP/USD
The cable trended downwards but found some halt at 1.3350. If the currency pair drops below 1.3340 we expect it to test the 1.33-barrier from where potential reversals are becoming more likely. On the upside we expect the 1.3470-1.35 resistance zone to limit near-term gains.
This week, U.S. payrolls will be front and center. This month’s employment data will be viewed with some suspicion as investors search for signs of distortion, thanks to the impact of Hurricane Harvey. The non-farm payrolls report is due for release on Friday. Ahead of Friday’s report, traders will also keep an eye on the ISM Manufacturing Index (scheduled for release today at 14:00 UTC) and the ISM Services Index (Wednesday).
Here are our daily signal alerts:
EUR/USD
Long at 1.1818 SL 25 TP 20, 40
Short at 1.1760 SL 25 TP 20, 40
GBP/USD
Long at 1.3410 SL 25 TP 30-40
Short at 1.3335 SL 25 TP 30-40
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