- EUR/USD has shaken off the bearish pressure following Wednesday's slide.
- Latest data releases from the euro area were largely ignored by investors.
- Focus shifts to ECB Monetary Policy Meeting Accounts.
After having lost nearly 100 pips on Wednesday, EUR/USD has managed to hold its ground early Thursday. The pair trades in a narrow channel at around 0.9900 in the European session as investors wait for the European Central Bank (ECB) to release the accounts of its September policy meeting.
Earlier in the session, the data from Germany showed that Factory Orders declined by 2.4% on a monthly basis in August following July's contraction of 1.1%. This reading came in much worse than the market expectation for a decrease of 0.7% but had little to no impact on the shared currency's valuation. Additionally, Eurostat announced that Retail Sales in the euro area fell by 2% in August, compared to analysts' estimate of -1.7%.
Following the ECB's decision to hike its policy rate by 75 basis points in September, several ECB policymakers voiced their support for one more 75 bps increase in the next meeting. However, others argued that there were no signs of inflation expectations getting de-anchored in the eurozone and that a faster than warranted increase in key rates could weigh on the outlook.
In case the ECB's publication provides clarity regarding the size of the next hike, the euro's market valuation could be impacted. If investors are convinced of one more 75 bps rate hike, EUR/USD could gain traction and vice versa.
In the second half of the day, the US Department of Labor's (DOL) weekly Initial Jobless Claims data will be looked upon for fresh impetus. On Wednesday, ADP reported that employment in the private sector rose by 208,000 in September, slightly better than the market projection of 200,000. Additionally, the Employment Index component of the ISM's Services PMI survey rose to 53 in September from 50.2 in August. These figures helped the dollar gather strength and a similar market reaction could be witnessed if the DOL reports that less than 200K people applied for unemployment benefits for the second straight week.
EUR/USD Technical Analysis
EUR/USD returned below the 200-period SMA on the four-hour chart and the Relative Strength Index (RSI) indicator declined toward 50, pointing to a loss of bullish momentum.
The pair was last seen trading within a touching distance of 0.9900 (psychological level, Fibonacci 23.6% retracement of the latest uptrend) and additional losses toward 0.9830 (100-period SMA, Fibonacci 38.2% retracement) and 0.9800 (psychological level) could be observed if that level is confirmed as resistance.
On the upside, 0.9920 (200-period SMA) aligns as next resistance ahead of 1.0000 (psychological level, end-point of the downtrend).
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.