EUR/USD Forecast: Bulls fight to retain control
|EUR/USD Current Price: 1.0635
- The Euro Zone Harmonized Index of Consumer Prices printed at 2.9% YoY in October.
- Global stocks trade in the green, Wall Street’s futures ease after US employment-related data.
- EUR/USD holds on to intraday gains, but buyers hesitate ahead of 1.0700.
The EUR/USD pair extended its weekly gains, trading as high as 1.0674 mid-European session but retreating ahead of Wall Street’s opening. The Euro benefited from encouraging inflation-related data, as the preliminary estimate of the October Harmonized Index of Consumer Prices (HICP) resulted in 2.9% YoY, easing from the previous 4.3% and below the 3.1% expected. The core annual reading printed at 4.2%, as expected, down from 4.5% in August.
The Euro Zone also published the preliminary estimate of the Q3 Gross Domestic Product (GDP), which was less optimistic. According to the official report, the economy advanced at a modest annualized pace of 0.1% in the three months to September, slightly below the 0.2% expected.
Meanwhile, an optimistic market mood maintains the US Dollar under selling pressure. Investors welcomed the no escalation of the Middle East conflict between Israel and Hamas and shrugged off tepid Chinese data. China’s October NBS Manufacturing PMI contracted to 49.5 from 50.2 in September, while the Non-Manufacturing PMI came down to 50.6 from 51.7 previously.
Data-wise, the United States (US) released the Q3 Employment Cost Index, which rose by more than anticipated, up 1.1% in the quarter. The figure spurred some concerns as it reflects persistent inflationary pressures in the labor sector. Global indexes trade in the green, although US futures retreated with the headline. The country will later publish the August Housing Price Index, the October Chicago PMI and CB Consumer Confidence, the latter seen at 100.5 in October, declining from the previous 103.0
EUR/USD short-term technical outlook
The EUR/USD pair is up for a third consecutive day, facing resistance at 1.0693, the October monthly high. Technical readings favor an upward extension, as the pair recovered further after meeting buyers around a now bullish 20 Simple Moving Average (SMA) at the beginning of the week. At the same time, technical indicators aim north within positive levels, reflecting increased buying interest.
In the near term, and according to the 4-hour chart, bulls retain control. Technical indicators hover near overbought readings, partially losing their bullish strength, but there are no other signs of upward exhaustion. At the same time, EUR/USD develops far above its moving averages, with the 20 SMA crossing above a mildly bullish 100 SMA. The pair needs to retain the 1.0620 mark and run past the aforementioned high to maintain its bullish bias throughout the upcoming sessions.
Support levels: 1.0620 1.0575 1.0530
Resistance levels: 1.0693 1.0740 1.0785
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