EUR/USD Forecast: Battling to retain the 1.0500 mark
|EUR/USD Current Price: 1.0502
- Financial markets fear the Federal Reserve (Fed) will deliver additional monetary tightening.
- United States employment-related data come in better than anticipated.
- EUR/USD losing momentum around 1.0500 as USD bulls lead the way.
The EUR/USD pair trades in a tight range just above the 1.0500 threshold on Thursday, as market players maintain a cautious stance ahead of United States (US) employment-related clues. Hawkish comments from US Federal Reserve (Fed) officials earlier in the week dampened the mood as their words hinted at a possible rate hike in the November meeting, given stubbornly high inflation.
Government bond yields soared to multi-year highs, reflecting speculative interest concerns, with the yield on the 10-year Treasury note jumping to levels last seen in 2007. The US Dollar benefited from market fears, although extreme overbought conditions put the American currency in a corrective decline on Wednesday. Still, the USD trades near recent multi-month highs against most major rivals, with no signs of changing course.
Data-wise, Germany published the August Trade Balance, which posted a surplus of €16.6 billion, better than the €15 billion expected. However, exports were down 1.2%, while imports decreased by 0.4% in the month. Meanwhile, the US released the Goods and Services Trade Balance, reporting a deficit of $58.3 billion, better than anticipated. Also, the country published Initial Jobless Claims or the week ended September 29, printing at 207K and September Challenger Job Cuts, with US-based employers announcing 47,457 cuts in the month, down 37% from the 75,151 cuts announced in August, but up 58% from the 29,989 announced in September 2022.
EUR/USD short-term technical outlook
The daily chart for the EUR/USD pair shows it stands at the upper end of Wednesday’s range but without enough strength to extend its latest recovery. Technical indicators have turned flat well below their midlines after correcting extreme oversold conditions, reflecting the absence of buying interest. At the same time, the 20 Simple Moving Average (SMA) maintains its bearish slope far above the current level while below the longer moving averages.
The 4-hour chart offers a neutral stance. The pair consolidates a handful of pips above a mildly bearish 20 SMA while the 100 and 200 SMAs head firmly south over 100 pips above the current level. Technical indicators, in the meantime, lost their directional strength, although the Momentum holds within positive levels while the Relative Strength Index (RSI) consolidates at around 47, favoring a bearish extension.
Support levels: 1.0485 1.0450 1.0410
Resistance levels: 1.0540 1.0590 1.0630
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