EUR/USD analysis: modest gains as dollar suffers

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1577

EUR lacks attractive enough to break higher, further gains at doubt.
ZEW Survey expected to show that business sentiment continues deteriorating in the EU.

The EUR/USD settled below the 1.1600 figure after gapping lower at the weekly opening and hitting a daily high of 1.1605, with the greenback being the worst performer at the end of the day. The American currency opened the week on a strong note, as political woes in the EU and the UK spurred risk aversion. Asian equities collapsed, on news that EU and the UK weren't able to reach a Brexit agreement over the weekend, while in Germany, Angela Merkel's conservative allies have lost their absolute majority in a regional election in the state of Bavaria, the worst result in almost eight decades. Dollar's demand eased during the European morning, as local share markets managed to gain some ground, while the greenback was further hurt by the release of US September Retail Sales. The report offered a mixed outcome, as sales rose by just 0.1% in the month vs. the 0.5% expected. Sales ex-auto resulted at -0.1%, missing the market's forecast of 0.3%, while July reading was downwardly revised to 0.2%. The control group, however, came in better-than-expected at 0.5%. Also, the NY Empire State Manufacturing Index for October was upbeat, printing 21.2 vs. the 20 forecast and the 19 previous.

The EU will release this Tuesday its August trade balance data, while Germany will release the ZEW survey, expected to show that sentiment deteriorated further, both in the EU and the country in October. The US will release multiple minor reports, with the most relevant being September Industrial Production and Capacity Utilization.

Meanwhile, the pair settled a handful of pips below its daily high and around the 38.2% retracement of the 1.1814/1.1431 daily decline at 1.1575. In the 4 hours chart, the pair was unable to sustain gains above a bearish 100 SMA, but trades above a bullish 20 SMA, with the strong upward slope of the shortest maintaining the risk skewed to the upside. Technical indicators in the mentioned chart held into positive ground, but lacking directional strength. A tough resistance area comes around 1.1620/30, where the pair has the 50% retracement of the mentioned decline and the 200 SMA in the mentioned chart. The risk will turn south on a break below 1.1530, the low set last Friday.

Support levels: 1.1575 1.1530 1.1500

Resistance levels: 1.1620 1.1660 1.1700

View Live Chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

USD/JPY hovers below 160.50 intervention zone ahead of FOMC decision

USD/JPY remains below the 160.50 intervention zone in the Asian session on Wednesday. Despite the BoJ's rate hike to its highest level since 1995, Japan's borrowing costs remain significantly lower than the US, undermining the Japanese Yen. However, thpair US Dollar remains on the back foot amid the optimism over the US-Iran peace deal and ahead of the Fed policy decision, weighing on the pair.

AUD/USD holds steady above 0.7050; looks to Fed for fresh impetus

AUD/USD is consolidating above mid-0.7000s in the Asian session on Wednesday as traders await the outcome of a two-day FOMC meeting due later in the day. In the meantime, the optimism over an interim peace deal between the US and Iran keeps the US Dollar bulls on the defensive. This, along with the RBA's hawkish pause on Tuesday, acts as a tailwind for the pair.

Gold holds below 200-SMA as traders await Fed rate-call

Gold preserves weekly gains registered over the past two days, though it remains below a technically significant 200-day SMA through the Asian session on Wednesday. Traders now seem hesitant and are keenly awaiting the highly anticipated Fed rate decision before placing fresh directional bets. In the meantime, the US-Iran interim peace deal keeps the US Dollar on the defensive, acting as a tailwind for the bullion.

Coinbase outlines 'Everything Exchange' vision with planned tokenized stocks and AI advisor

Crypto exchange Coinbase unveiled a broad slate of new products on Tuesday, outlining plans to expand into tokenized equities and AI-powered investment tools in its pursuit of becoming an "Everything Exchange." A centerpiece of the roadmap is Coinbase's planned launch of tokenized US equities for customers outside the United States.

The most important event will be the Fed meeting with Mr. Warsh now in charge

The most important event will be the Fed meeting on Wednesday, with Mr. Warsh now in charge. As more than one analyst points out, the case for holding rates the same is strengthened by the Iran deal and the prospect of the Strait re-opening, although nobody thinks Warsh can marshal enough doves to do a cut this time.

Why a hawkish RBA is no longer enough to lift the Australian Dollar

The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it, focusing instead on slowing economic growth and proving that central bank messaging alone isn’t always enough to drive currencies.