EUR/USD Forecast: Sellers not actually interested
|EUR/USD Current Price: 1.0683
- Tepid European data put near-term pressure on the Euro.
- US Federal Reserve officials poured cold water on speculation the tightening cycle is over.
- EUR/USD eased from a fresh multi-month high, but additional slides seem unlikely.
The EUR/USD pair eased from a fresh multi-month peak of 1.0755, trading in the 1.0680 price zone early in the American session. Optimism faded during Asian trading hours, with the sour tone of local indexes extending into Europe and backing the US Dollar’s recovery. Softer than anticipated Chinese data weighed on the market mood, as the October Trade Balance posted a surplus of $56.53 billion, missing expectations and below the previous $77.71 billion.
Meanwhile, US Federal Reserve (Fed) officials poured cold water on speculation the central bank is done with monetary tightening. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, said he is not convinced rate hikes are over and that he prefers over-tightening rather than not doing enough to tame inflation. Several Fed speakers will be on the wires over the next few days, Chairman Jerome Powell included.
Market participants are also monitoring the bond market, as US Treasury yields recovered on Monday ahead of large auctions scheduled for this week. Yields are picking up ahead of Wall Street’s opening, with the 10-year note currently offering 4.63%, down 2 basis points (bps) and the 2-year note yielding 4.95%, adding 1 bps.
Data-wise, Germany published September Industrial Production, which fell by 1.4% MoM, worse than expected. Additionally, the Producer Price Index (PPI) rose by 0.5% MoM in the Euro Area in September and by 0.6% in the Euro Zone, according to Eurostat. The US will publish the September Trade Goods and Services Trade Balance and November IBD/TIPP Economic Optimism. Finally, multiple US Federal Open Market Committee (FOMC) members will be on the wires throughout the American session, with speculative interest looking for hints on potential monetary policy moves.
EUR/USD short-term technical outlook
The EUR/USD pair has lost momentum, but technical readings in the daily chart fall short of suggesting a continued slide. The pair stands midway between a bullish 20 Simple Moving Average (SMA), providing dynamic support at around 1.0590, and mildly bearish 100 and 200 SMAs, converging around 1.0805. In the meantime, technical indicators have eased from their weekly peaks but remain well above their midlines with uneven downward strength.
In the near term, and according to the 4-hour chart, the picture is quite alike. EUR/USD hovers just below a bullish 20 SMA while holding far above a bullish 100 SMA. The Momentum indicator heads lower, although above its 100 line, while the Relative Strength Index (RSI) indicator consolidates at around 52, reflecting limited selling interest. A break through the daily low at 1.0665 should favor another leg south, although a sharp slide through 1.0600 seems unlikely.
Support levels: 1.0665 1.0620 1.0590
Resistance levels: 1.0710 1.0760 1.0805
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