EURUSD – Euro dips on hawkish Fed statement

EUR/USD has ticked lower in the Friday session. Currently, the pair is trading at 1.1336, down 0.24% on the day. The euro is now at its lowest level since November 1. On the release front, there are no German or eurozone events. In the U.S, PPI and Core PPI are both expected to post gains of 0.2% for October, unchanged from the September readings. As well, UoM Consumer Sentiment is forecast to slow to 98.0 points.

After the turbo-charged excitement over the U.S. mid-term elections, the Federal Reserve meeting paled in comparison. The markets were not expecting much drama, as it was not really a “live meeting” – there was virtually no chance of a rate hike, and no press conference from Fed chair Jerome Powell. Fed policymakers had trouble poking holes in the image of a booming U.S economy. The rate statement noted that job creation is solid, unemployment is down and consumer spending has been growing. The one caveat to this rosy picture was that business investment has slowed. The statement added that further “gradual increases” are expected, given that headline and core inflation are close to the Fed target of 2 percent. The Fed next convenes in mid-December, with the CME Group pegging the odds of December rate hike at a strong 76 percent.

The crisis over the Italian budget continues to fester, with no solution in sight. The EU’s Economic Commissioner, Pierre Moscovici, has demanded that Rome revise its budget, which he says increases Italy’s debt-to-GDP ration and is in breach of EU rules. Moscovici has demanded a response from Rome by November 13 and has even threatened sanctions if the Italian government does not comply. On Wednesday, Italian Prime Minister Giuseppe Conte said that he had no intention of backing down over the budget. Italy is the third largest economy in the eurozone, and the financial markets and the euro could react negatively if Rome and Brussels cannot resolve the crisis.

European Open – Stocks lower on hawkish Fed

EUSD/JPY retreats from five-week high

The Fed affect

 

EUR/USD Fundamentals

• 2:45 French Industrial Production. Estimate -0.3%. Actual -1.8%

• 8:30 US PPI. Estimate 0.2%

• 8:30 US Core PPI. Estimate 0.2%

• 9:05 US FOMC Member Randal Quarles Speaks

• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.0

• 10:00 US Preliminary UoM Inflation Expectations

Open: 1.1363 High: 1.1369 Low: 1.1330 Close: 1.1336

 

EUR/USD Technical

S1	S2	S1	R1	R2	R3
1.1120	1.1212	1.1300	1.1434	1.1553	1.1685

EUR/USD inched higher in the Asian session but then reversed directions and lost ground. The pair has posted slight losses in European trade

• 1.1300 is providing support

• 1.1434 has strengthened in resistance after losses by EUR/USD on Thursday and Friday

• Current range: 1.1300 to 1.1434

Further levels in both directions:

• Below: 1.1300, 1.1212 and 1.1120

• Above: 1.1434, 1.1553, 1.1685 and 1.1800