The euro continues to trade in the side channel paired with the US dollar on Monday, October 29. In the first half of the day, the pair fell after the results of the elections for The Christian Democratic Union of Angela Merkel in the land of Hesse, where the financial sector of Germany is mainly concentrated, was announced. Following the elections, the current government received the weakest support in its history.
As a result, German Chancellor Angela Merkel said that she would not be re-elected to the post of Chairman of the Christian Democratic Union. Let me remind you that Merkel has been heading this Union for 18 years. It is worth noting that the position of the head of the Christian Democratic Union in recent years significantly fell, as evidenced by the regional elections in various lands in Germany.
As for the support of the euro, Friday's decision of the S&P ratings agency is still fresh in the memory of traders, as well as statements made by the European Commission.
At the end of last week, S&P left Italy's credit rating unchanged, only downgrading the outlook for the rating to negative.
The European Commission's reaction to Italy's violation of budget rules also contributes to the demand for the European currency. As I noted in my morning review, the European Commission does not intend to respond with hostility to the statements of the Italian authorities, which were addressed to the EU at the beginning of last week. This will smooth out volatility in the financial markets, as well as maintain a strong position in Brussels.
Despite this, a number of investors and traders continue to be cautious, which is reflected in the EUR/USD quotes.
As for the technical picture of the EUR/USD pair, traders are currently focused on the level of 1.1430, the breakthrough of which will move the pair to a wide side channel with a larger resistance of 1.1480. Buyers also managed to hold the level of 1.1365, thus allowing the lower boundary of the rising channel, but this will only be possible after breaking the resistance at 1.1430.
The British pound continues to trade in a narrow side channel paired with the US dollar. Today's data that British consumers took less unsecured loans in September this year, led to a slight decline in the pound. However, the bears failed to resume a major downward trend.
The decline in demand for loans indicates that British households will be more careful about their spending in the future, which may affect the prospects for economic growth.
According to the Bank of England, in September of this year, unsecured consumer loans were issued in the amount of 785 million pounds against 1.2 billion pounds in August. The growth in unsecured consumer lending was 7.7%. The total amount of consumer lending, including mortgage loans, rose to 4.7 billion pounds in September against 4.3 billion pounds in August.
The material has been provided by InstaForex Company - www.instaforex.com