EUR/USD Forecast: Dollar firmer ahead of US Federal Reserve’s decision

Valeria Bednarik FXStreet

EUR/USD Current Price: 0.9881

Uncertainty surrounding US Federal Reserve’s tightening path keeps the market volatile.
US employment-related data surprised to the upside, boosting the American currency.
EUR/USD gains bearish strength in the near term, but a directional move depends on the Fed.

The EUR/USD pair pulled back from a daily high of 0.9953 and finished the day in the red, near a fresh weekly low of 0.9852. The greenback spent the first half of the day on the back foot, as easing government bond yields and speculation China will ease its zero-covid policy underpinned high-yielding assets. Asian and European stock indexes closed in the green, further affecting the US Dollar.

Things changed early in the American session after impressive US data. According to the US Bureau of Labour Statistics, the JOLTS report showed that the number of job openings increased to 10.7 million on the last business day of September. The delayed report gained relevance after US Federal Reserve chair Jerome Powell mentioned they keep an eye on it when making decisions on monetary policy.

Furthermore, the October ISM Manufacturing PMI came in better than expected, printing at 50.2. The employment sub-component, however, slid to 50, while that measuring prices paid contracted to 46.6, as manufacturers noted “a decline in the prices for oil, metals and other commodities used for production.”

Wall Street turned sharply lower as the news pushed US Treasury yields back up. The yield on the 10-year Treasury note bounced from a daily low of 3.92%, hitting an intraday high of 4.079% mid-US afternoon.

On the other hand, Germany published the September Import Price Index, which declined in September by 0.9%, well below the 0.6% advance expected. The annual reading posted a 29.8% increase, below the expected 31.7%.

On Wednesday, the focus will be on the US Federal Reserve, as the central bank will likely hike the benchmark interest rate by 75 bps for the last time this year. US Fed officials have already hinted they could slow the pace of quantitative tightening in their December meeting. Upbeat US macroeconomic data, however, leaves the door open for more aggressive hikes after November’s decision.

EUR/USD short-term technical outlook

The EUR/USD pair trades in the 0.9880 pice zone, lacking clear directional strength. The daily chart shows that the pair has been trading above a flat 20 SMA, currently around 0.9830, and below a bearish 100 SMA, the latter providing dynamic resistance around 1.0065. Technical indicators, in the meantime, have turned flat within positive levels after flirting with overbought conditions last week.

The 4-hour chart shows that a firmly bearish 20 SMA capped the early advance, while the 100 SMA crosses above a directionless 200 SMA, both in the 0.9830/40 area. The Momentum indicator turned lower within negative levels, while the RSI indicator hovers around 42, skewing the risk to the downside. The bearish potential should increase if the pair breaks below the aforementioned support area, with scope then to approach the 0.9700 threshold.

Support levels: 0.9835 0.9790 0.9745

Resistance levels: 0.9965 1.0020 1.0065

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.

GBP/USD hits multi-week tops around 1.3560

GBP/USD gathers fresh steam and advances to new three-month peaks near the 1.3560 zone on Friday. Cable’s sharp move higher comes after three daily drops in a row and follows the increasing selling pressure hurting the Greenback.

EUR/USD pops to fresh two-month highs, targets 1.1600

EUR/USD advances markedly, revisiting the upper 1.1500s for the first time since mid-June. The pair’s sharp uptick comes on the back of a strong retracement in the US Dollar amid BoJ intervention chatter and despite steady uncertainty in the Middle East.

Gold picks up pace, approaches $4,400

Gold rebounds toward the $4,400 mark per troy ounce on Friday, reversing the previous day’s pullback. The precious metal’s recovery comes as fresh and intense weakness keep weighing on the US Dollar, while traders keep assessing easing expectations of an imminent Fed interest rate hike and the situation from the Middle East.

Pi Network Price Forecast: PI extends consolidation as bulls eye $0.10

Pi Network (PI) price holds steady on Friday, maintaining a consolidating tone for three consecutive days. Mild retail strength in the PI token remains stable, with Open Interest above $9 million, while social buzz eases. PI token’s technical outlook is mixed, as bearish momentum wanes to neutral, with bulls eyeing the $0.1000 psychological level.

Weekly focus: Some relief in US inflation concerns

Actual inflation data for July came out as expected with a 0.1% m/m increase in headline CPI and 0.2% excluding food and energy. Annual headline inflation remains too high at 3.4% and means that wage earners are experiencing stagnating spending power at best, and core inflation is a bit higher than the inflation target of two percent would suggest.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.