EUR/USD Current Price: 1.0924
- Financial markets continue to drop the US Dollar, hoping the tightening cycle is over.
- Germany’s economy will remain on the back foot throughout the last quarter of the year.
- EUR/USD lacks momentum, but the risk remains skewed to the upside.
The EUR/USD pair traded as high as 1.0939 on Monday as market participants cheered the end of monetary tightening. United States (US) inflation and employment-related data published in the past few weeks indicated that price pressures continued receding in October while the labor market loosened. The US Dollar edged lower against all its major rivals throughout the Asian session as stock markets advanced.
Government bonds declined in Asia, which helped Treasury yields bounce back from the two-month lows posted last Friday. Still, the 10-year Treasury note offers 4.47%, up modest 3 basis points (bps), far from the roughly 5% it yielded mid-October.
The German Bundesbank posted its monthly report, showing the central bank does not expect an economic recovery at the beginning of 2024, with a slight decline anticipated for the last quarter of 2023. The bank also noted the local economy continues to experience difficult economic conditions.
Data-wise, Germany released the October Producer Price Index, down 0.1% MoM as expected. The annual reading printed at -11%, also meeting the market’s forecast. The US calendar has nothing relevant to offer on Monday, but the Federal Open Market Committee (FOMC) will unveil the Minutes of its latest meeting on Tuesday.
EUR/USD short-term technical outlook
The EUR/USD pair is poised to extend its advance according to the daily chart. The pair is up for a second consecutive day, extending gains above all its moving averages. The 20 Simple Moving Average heads firmly north, far below the current level, also below the 100 and 200 SMAs, but still reflecting persistent buying interest. Technical indicators, in the meantime, pick up with uneven strength within overbought levels, skewing the risk to the upside.
Near term, EUR/USD lacks momentum. The 4-hour chart shows the pair develops above all its moving averages, with the 20 SMA partially losing its upward strength, although still far above the longer ones, limiting the downside. At the same time, the Momentum indicator turned directionless within positive levels, while the Relative Strength Index (RSI) indicator eases from extreme overbought readings. The chances of a downward move are limited, while a test of 1.0960 is more likely in the upcoming sessions.
Support levels: 1.0890 1.0840 1.0800
Resistance levels: 1.0960 1.1005 1.1045
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.