- The EUR/USD hit three-month highs but struggled to hold above 1.0950.
- The US Dollar corrected higher, but the trend remains bearish.
- FOMC minutes offered no surprises; focus turns to US data.
The EUR/USD fell on Tuesday after hitting a fresh three-month high at 1.0964. The decline is seen as corrective in nature as the Greenback remains weak. Steady yields and a pullback in equity prices favored the US Dollar, while the Euro lagged.
US data released on Tuesday showed a larger-than-expected decline in Existing Home Sales in October to an annual rate of 3.7 million, against expectations of 3.9 million. On Wednesday, the weekly Jobless Claims, Durable Goods Orders, and the final reading of University of Michigan Consumer Sentiment are due.
The FOMC minutes offered no new information. Members remain concerned about inflation, pointing out that more tightening would be appropriate if the progress in bringing inflation toward the goal proves to be insufficient. Markets ignored the minutes.
The Euro lost ground across the board during the European and American sessions, driven by a decline in EUR/GBP. The next key report from the Eurozone will be on Thursday with the preliminary November PMIs
EUR/USD short-term technical outlook
Despite the retreat, the trend continues to point to the upside, and the price remains firm above key Simple Moving Averages in the daily chart. The Relative Strength Index (RSI) is moving lower from overbought levels, suggesting that the pair may consolidate before another leg higher. If it holds above 1.0950, a test of 1.1000 seems likely.
On the 4-hour chart, the pair remains in a bullish stance but indicates that a correction still has room to extend further. The immediate strong support area is seen around 1.0885, followed by 1.0830, an area that could attract buyers.
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