The euro strengthened its position after the release of data on the US economy for the 3rd quarter, which differed from experts' forecast for the better, but turned out to be worse than the same indicator in the 2nd quarter of this year. Statements made by representatives of the European Commission on the Italian budget deficit also helped the euro to strengthen its position against a number of world currencies.

European Commission

As it became known, most likely, the European Commission will not severely react to Italy's violation of the rules of the budget, as well as hostilely respond to statements of the authorities, which were addressed to the European Commission at the beginning of last week. According to EU representatives, this will smooth the volatility in the financial markets, as well as maintain a strong position in Brussels.

According to the statements made on Friday, the European Commission will adhere to a soft line in its confrontation with Rome due to the violation of the EU's requirements regarding the budget deficit. Let me remind you that in the next two weeks, Italy will submit a new version of the budget for approval by the European Commission, where the deficit will be within the limits set by the EU. If the deficit will continue to be higher than normal, the European Commission may resort to penalties through established procedures.

U.S. economy

As I noted above, the report on US GDP growth released on Friday, although it did not help the US dollar in maintaining its growth against world currencies, but decreased the concerns of economists regarding the larger slowdown in the economy. Consumer spending has managed to offset the decline in investment companies and the fall in U.S. exports.

According to the data of the US Department of Commerce and the first leading estimate, the gross domestic product in the 3rd quarter grew by 3.5% per annum compared with the previous quarter. Economists had expected GDP growth in the 3rd quarter to be 3.4%. The main driver of growth was consumer spending, which rose by 4.0% per annum in the 3rd quarter.

Exports fell by 3.5%, mainly due to problems in international trade, while imports rose by 9.1%.

Data on the decline in the level of confidence of US households in the economy at the end of October this month also affected the quotes of the US dollar. Despite the fact that expectations remain high, according to the University of Michigan report, the consumer sentiment index in October 2018 amounted to 98.6 points against the preliminary value of 99 points. Economists had expected the final index to remain at 99 points in October.

As for the technical picture of the EUR/USD pair, a good and large upward rebound, against the background of profit taking, has only led to the update of the upper limit of the downward channel, which is now located in the resistance area of 1.1410. Only its breakout will allow you to move the trade to a wide side channel, with larger resistance levels in the area of 1.1440 and 1.1480. In case the euro repeatedly declines, the news will attempt to hold the trading instrument in the area of the intermediate support level at 1.1365. If the breakout takes place, the pressure on the euro will increase significantly, which will open prospects for a decrease in the range of new lows 1.1300 and 1.1250.