EUR/USD Current Price: 1.0262
- European Central Bank officials keep hinting at another 75 bps rate hike in December.
- Market participants remain cautious amid concerns about global economic growth.
- EUR/USD’s near-term picture hints at a potential leg lower towards 1.0190.
The EUR/USD pair recovered some ground throughout the first half of the day after shedding over 100 pips at the beginning of the week. The advance, however, was modest, with the pair trading around 1.0260 ahead of Wall Street’s opening. Stock markets perform better, with most Asian and European indexes holding on to modest gains and putting pressure on the US Dollar. At the same time, US Treasury yields remain subdued, giving up most of their Monday’s gains.
European Central Bank officials continue to favor a 75 bps rate hike. On Tuesday, it was the time for Robert Holzmann, head of the National Bank of Australia, to back a third consecutive aggressive rate hike. The move would raise the deposit rate to 2.25%. Also, Finnish ECB policymaker Olli Rehn said the ECB would continue to raise interest rates, and the pace of its hikes will be determined by the rate of inflation and the overall economic situation,
Meanwhile, concerns about the coronavirus situation in China remain the same. The country reported another increase in national cases, and Beijing shut down public places such as parks and museums. The potential economic setback of the world’s second-largest economy limits high-yielding assets’ gains.
The macroeconomic calendar has little to offer today. The EU published the September Current Account, which posted a seasonally adjusted deficit of €8.06 billion, much better than the previous contraction of €26.9 billion. The American session will bring a couple of Federal Reserve officials and the preliminary estimate of November Consumer Confidence but no relevant data.
EUR/USD short-term technical outlook
The daily chart for EUR/USD shows that the pair is confined to the lower end of Monday’s range, recovering its bullish poise. The pair is developing above a bullish 20 SMA, which advances above the 100 SMA, the latter converging with a critical Fibonacci support level, the 61.8% retracement of the 0.9729/1.0480 rally at 1.0017. A closer Fibonacci support level is 1.0190, the 38.2% retracement of the same advance. Technical indicators in the mentioned time frame have held near overbought readings, slowly grinding higher, although lacking strength enough to confirm an upward extension.
On the other hand, the near-term picture shows that the risk remains skewed to the downside. The 20 SMA extended its decline above the current level, converging with the 23.6% retracement at around 1.0305. The longer moving averages maintain their bullish slopes well below the current level, while technical indicators hold within negative levels with modest downward slopes.
Support levels: 1.0225 1.0190 1.0145
Resistance levels: 1.0305 1.0350 1.0395
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