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  • EUR/USD jumped 1.22% last week, confirming the longest weekly winning run in over a year.  
  • Waning Brexit optimism is weighing over Pound and may cap upside in the common currency.  

EUR/USD gained 1.22% last week, having rallied by 0.54% and 0.33%, respectively in the preceding two weeks.  The three-week winning streak is the longest since July 2018.  

Notably, the last week’s gains could be associated with the Brexit optimism and the resulting rally in the British Pound.  

UK’s Prime Minister Borish Johnson tried to have a meaningful vote  on his Brexit deal on Saturday, but parliament passed an amendment withholding support until full legislation is passed.  

Johnson, therefore, asked the European Union (EU) for a three-month extension.  

As a result, British Pound traded on a weak note in Asia, capping gains in EUR/USD. The GBP/USD’s options market has turned bearish, indicating waning Brexit optimism.  The common currency, therefore, may have a hard time extending the previous week’s rally.  

It is worth noting that the German Producer Price Index is scheduled for release at 06:00 GMT and the Bundesbank’s monthly report is due for release at 10:00 GMT.  The EUR may face selling pressure if the September PPI prints well below the estimate of -0.1% month-on-month, bolstering recession fears.  

The common currency could also take a hit if the European Union retaliates to the US’ decision to impose tariffs on  $7.5 billion worth  of European imports that were sanctioned by the WTO for the damage caused by improper subsidies to Airbus. The tariffs went into effect last week.  

Technical levels