EUR/USD Current price: 1.1597

  • US CB Consumer Confidence unexpectedly surged in October, hinting at firmer economic growth.
  • Inflationary pressures in the EU reached a seven-year high ahead of ECB’s meeting.
  • EUR/USD is technically bearish and approaching 1.1570, an immediate support level.

The EUR/USD pair trades around 1.1590, marginally lower for the day. The pair met sellers around 1.1625 ahead of Wall Street’s opening, as solid earnings reports sent indexes to record highs, while US data were mostly upbeat. Stocks’ momentum faded as the session unwound, preventing the dollar from appreciating further. Meanwhile, US government bond yields retreated further, with that on the 10-year Treasury note currently at 1.62%.

 The shared currency was once again affected by disappointing local headlines. The European Central Bank published the Bank Lending Survey, which showed that local banks tightened access to mortgages in the three months to September and foresaw a similar picture for Q4. Also, Eurozone inflation expectations jumped to 2.05%, its highest in seven years amid rising energy prices and supply chain bottlenecks.

On the other hand, the US Richmond Fed Manufacturing Index improved to 12 in October, much better than the previous -3 or the expected 3. New Home Sales increased by 14% MoM in September, while CB Consumer Confidence unexpectedly bounced in October, printing at 113.8 from an upwardly revised 109.8.  On a down note, the Housing Price Index was up a modest 1% in August, missing the market’s expectations.

On Wednesday, Germany will publish the November GFK Consumer Confidence Survey, foreseen at -0.5 from 0.3 previously, while the US will release September Durable Goods Orders, expected to have fallen by 1.1% in the month.

EUR/USD short-term technical outlook

The EUR/USD pair is down for a second consecutive day and seems poised to extend its decline. It is currently trading below the 23.6% retracement of the 1.1908/1.1523 decline, at 1.1615. The daily chart shows that the pair is converging with a bearish 20 SMA, while below the longer ones, which also head firmly south. The Momentum indicator is steady just above its midline, while the RSI indicator heads south at around 42, reflecting the increased bearish potential.

In the near term, and according to the 4-hour chart, the risk is skewed to the downside as the pair is currently developing below all of its moving averages, below the 100 SMA for the first time in over a week. Meanwhile, technical indicators have pared their declines, reflecting the current consolidation, but remain near their daily lows, a sign that bears retain control.

Support levels: 1.1570 1.1525 1.1480

Resistance levels: 1.1670 1.1715 1.1750

View Live Chart for the EUR/USD

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