EUR/USD Forecast: Rally Ruined By Raab, Euro Suffers From Brexit Blues

• EUR/USD's gains are limited by fears that the Brexit deal could be derailed.
• US retail sales, speeches by Fed officials, and Brexit are set to dominate. 
• The technical picture is improving for the pair.

EUR/USD is trading above 1.1300 but off the highs. Brexit is dominating the headlines. UK PM Theresa May managed to pass the Brexit deal through the cabinet despite many objections. She faces an uphill battle in Parliament and perhaps a motion of no-confidence within her Conservative Party. While the pound jumped up and down, the euro gradually advanced. 

However, the resignation of Brexit Minister Dominic Raab cast massive doubts on May's chances of surviving. The Pound plunged, and the Euro got carried down. Brexit headlines are set to dominate the scene and may continue having an impact on the Euro.

Analysis: Prime Minister May and Brexit’s one-sided approval

In the US, Fed Chair Jerome Powell warned about the long-term impact of growing fiscal debt. Also, he said that the Fed is watching the stock market but is focused on the real economy. He also mentioned some concerns about a slowing global economy. However, he remained content about the US economy and continued conveying the message of gradual rate hikes. 

Wednesday saw a slightly disappointing read on US inflation: Core CPI decelerated to 2.1 percent YoY against 2.2 percent that was projected for October. Today, the US releases Retail Sales. All the measures are forecast to enjoy healthy gains. The Control Group is the most important one.

See: US Retail Sales Preview: Strong currents ahead of holiday shopping season

European issues are currently in the backburner. The German economy contracted by 0.2 percent in Q3, worse than expected and a source of worry for the whole continent. Italy's defiance to the European Commission's rejection of its budget has been shrugged off by markets so far. The EC is set to respond on November 21st.

EUR/USD Technical Analysis

The technical picture is improving for EUR/USD. Downside momentum has waned, and the Relative Strength Index is stable. However, the 50 Simple Moving Average on the four-hour chart capped the pair at 1.1355, a line that previously provided support.

Further up, 1.1400 is a round number and also provided support last week. 1.1430 served as both support and resistance in November and October. 1.1460 held EUR/USD down in early November. 1.1500 was the peak around the US Mid-Term Elections.

Looking down, the round number of 1.1300 was a double-bottom and remains essential. 1.1260 worked as support earlier this week, and 1.1215 is the bottom of the cycle: the lowest point since June 2017.