The EUR/USD currency pair maintains a bullish outlook ahead of the Brexit vote later on Tuesday. The pair has been on a rebound over the last few days and this trend appears set to continue despite a negative expectation from the Brexit vote today when UK PM Theresa May’s proposed deal will face the vote in parliament.
EUR/USD Fundamental Analysis
The EUR/USD is expected to respond positively irrespective of the outcome of the Brexit vote today. Currently, there are three possible outcomes.
- That UK MPs reject May’s proposed deal that is already agreed with the EU, resulting in a No-deal Brexit on March 29.
- That UK MPs reject May’s deal but then agree for an extension of the deadline such that negotiations continue after March 29 (the likely outcome).
- That UK MPs accept May’s proposed Brexit deal that will set up another course for implementation of new policies.
In addition, the US is also reporting new inflation data today, which is expected to be moderate based on forecasts. This is expected to have minimal impact on the greenback. However, after China’s latest move to ground Boeing 737 Max planes, this is expected to have a mild negative impact on ongoing negotiations with the U.S. As such, it could affect the greenback as well.
EUR/USD Technical Analysis (the 240-min Chart)
Based on the 240-min chart above, the EUR/USD currency pair appears to be trading just above the 20-period moving average, and significantly below the 50-period moving average. If these two indicators were to continue playing the role of support and resistance respectively, then it shows that there is more room upwards.
This further supports the bullish case ahead of the Brexit vote. As such, the bulls will be targeting for profits at around 1.1300 while the bears will aim for an immediate pullback towards the 1.1250 level.
EUR/USD Technical Analysis (the Daily Chart)
In the daily chart, the bullish case scenario is further supported but in this case, it looks like it will be only for the short-term. The pair has been trading within a bearish trending channel, which is expected to hold in the foreseeable future. The 20-day and the 50-day moving average lines also appear to support a short-term bullish movement, as they are both just above the current exchange rate level for the EUR/USD currency pair.
In summary, the EUR/USD pair looks strongly bullish in the short-term but the bears still have control in the long-term. Today’s Brexit vote could shake things a bit depending on the outcome but it’s not expected to be much.