- EUR/USD has started to consolidate its gains following Wednesday's rally.
- US Dollar stays under selling pressure on dismal PMI surveys, FOMC Minutes.
- The pair needs to clear 1.0450 to continue to push higher.
EUR/USD has managed to edge higher early Thursday after having registered impressive gains on Wednesday. The pair's near-term technical outlook points to overbought conditions but buyers could retain control in case it flips 1.0450 into support.
The US Dollar came under heavy selling pressure during the American trading hours on Wednesday after S&P Global PMI surveys showed that the economic activity in the private sector contracted sharply in early November. The Manufacturing PMI dropped to 47.6 from 50.4 and the Services PMI declined to 46.1 from 47.8. Regarding the price developments, "reflecting the slower growth of input costs, firms raised their selling prices at the slowest rate for just over two years," the publication noted.
Later in the day, the minutes of the Federal Reserve's last meeting revealed that most policymakers were in favour of slowing the pace of rate hikes amid uncertainty surrounding the policy lag. The US Dollar continued to weaken against its rivals after the Fed's publication and EUR/USD preserved its bullish momentum.
The IFO's sentiment surveys for Germany will be featured in the European economic docket but they are unlikely to trigger a significant market reaction. In the second half of the day, the trading action is likely to remain subdued as the stock and bond markets in the US will be closed in observance of the Thanksgiving Day Holiday. Hence, investors will keep a close eye on the pair's technical developments.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart climbed above 70 during Wednesday's upsurge, pointing to overbought conditions. In case the pair stages a technical correction, 1.0400 (psychological level, former resistance) is likely to act as support. If the pair falls below that level and starts using it resistance, sellers could show interest and drag it lower toward 1.0350 (50-period Simple Moving Average (SMA)) and 1.0300 (20-period SMA, psychological level).
On the upside, interim resistance is located at 1.0450 (static level). If buyers flip that level into support, additional gains toward 1.0500 (psychological level) and 1.0530 (static level) could be witnessed.
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