EUR/USD Forecast: Quiet consolidation ahead of first-tier triggers

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0674

Hawkish comments from Fed and ECB officials weigh on the market mood.
Major pairs hold within familiar levels as investors await first-tier data.
EUR/USD trades in a tight range below 1.0700, bulls retain control.

Financial markets kickstarted the week in slow motion, with EUR/USD stuck to a tight 30 pips range so far on Monday. The US Dollar is generally softer across the FX board, although the absence of relevant news keeps major pairs within familiar levels. Furthermore, the USD trades not far from the highs set last week. Hawkish Federal Reserve (Fed) officials’ remarks last week helped the USD as investors are not as certain the central bank is done with monetary tightening.

After two consecutive pauses in rate hikes, the Fed has been working on convincing market participants that the time for rate cuts is not as close as they wish. Furthermore, policymakers insist on keeping the door open for additional tightening while adding the “higher for longer” mantra. Still, speculative interest prefers to believe the tightening cycle is over while trying to anticipate the beginning of a fresh rate-cut cycle.

The same happens with the European Central Bank (ECB). Vice-President Luis de Guindos noted they expect a temporary rebound in inflation in the coming months as the base effects from the sharp increase in energy and food prices in autumn 2022 drop out of the year on year calculation. e also repeated policymakers are determined to ensure that inflation returns to our 2% medium-term target in a timely manner. Finally, he added that European policymakers would not prejudge further rate movements. Latvian policymaker Martins Kazaks, in a different event, said it is too soon to say they have reached a terminal rate, adding that next rate moves will not be automatized.

Without data to care for, financial markets are moving on sentiment. The Greenback is finding some strength early in the American session, as stocks trade with a sour tone. Things will become a bit more interesting on Tuesday, as the United States (US) will release the October Consumer Price Index (CPI) on Tuesday, with financial markets anticipating the index at 3.3% YoY, decreasing from the previous 3.7%. Ahead of the announcement, the Euro Zone will publish the second estimate of the Q3 Gross Domestic Product (GDP), expected to be confirmed at -0.1% QoQ.

EUR/USD short-term technical outlook

From a technical point of view, EUR/USD holds on the winning side, according to the daily chart. The pair develops well above a bullish 20 Simple Moving Average (SMA), currently providing dynamic support at around 1.0625. The 100 and 200 SMAs offer modest downward slopes, converging around the 1.0800 price zone. Finally, the Momentum indicator aims north, firmly bouncing from its midline, while the Relative Strength Index (RSI) indicator consolidates around 54.

The 4-hour chart offers a neutral stance. The EUR/USD pair trades below a directionless 20 SMA, but the 100 SMA keeps heading north below the current level, suggesting limited selling interest. Meanwhile, technical indicators lack directional strength within neutral levels, reflecting the absence of clear directional interest.

Support levels: 1.0655 1.0620 1.0590

Resistance levels: 1.0710 1.0760 1.0800

View Live Chart for 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.

AUD/USD remains below 0.7000 amid light trading

AUD/USD fills a modest bearish gap on Monday, but remains below 0.7000 in the Asian session amid holiday-thinned liquidity. The US Dollar attempts a bounce even as US bond yields pull back from multi-year highs, limiting the pair. Moreover, diminishing odds of another RBA rate hike in November cap the Aussie.

USD/JPY hovers above 158.00 amid Japan/ US holiday

USD/JPY extends its range-bound price action into a new week, trading above 158.00 as bulls remain on high alert amid speculation that authorities will step in to prop up the Japanese Yen. Meanwhile, softer US bond yields keep US Dollar bulls on the back foot and cap the pair's upside. However, geopolitical uncertainties could limit losses for the safe-haven buck amid thin liquidity due to a holiday in Japan and the US.

Gold drifts higher above $4,200 on surging ETF inflows, markets await US inflation data this week

Gold price gains ground to near $4,215 during the early Asian session on Monday. The precious metal extends the rally amid rising demand for bullion-backed exchange-traded funds and a weaker US Dollar. Yellow metal receives some support from rising investment demand, with inflows into gold-backed exchange-traded funds reaching a four-year high, according to Bloomberg data.

Bitcoin reclaims $83,500, Ethereum takes back 50-day EMA, XRP holds support

Bitcoin (BTC) takes back $83,500 on Monday after a sharp correction, with the Crypto King slipping below $81,000 the previous week. Ethereum (ETH) and Ripple (XRP) followed BTC’s footsteps, recovering and reclaiming the $2,500 and $1.400 marks after a pullback last week.

Middle East War updates: New attack launched on Saudi airport

Here’s a brief recap of the key developments in the Middle East war that occurred over the weekend, which are expected to have a significant impact on markets in the upcoming week. In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?