- EUR/USD fades part of the earlier advance to the 1.0350 region.
- Germany flash Manufacturing PMI seen rebounding a tad in November.
- Markets’ attention will be on the release of the FOMC Minutes later in the day.
The European currency extends the recent optimism and lifts EUR/USD to the 1.0350 zone on Wednesday, where it appears to be encountering some initial resistance.
EUR/USD focuses on the Fed, data
EUR/USD advances for the second session in a row so far against the backdrop of renewed selling pressure in the Greenback, which also appears weighed down by the lack of traction in US yields.
In the German debt market, the key 10-year bund yield remains flat-lined just below the 2.0% yardstick.
There is no meaningful reaction in the pair to the mixed results from the advanced PMIs in both Germany and the broader Euroland for the month of November. Indeed, the Manufacturing PMI came out at 46.7 (from 45.1) in Germany and 47.3 (from 46.4) in the euro bloc, while the Services gauge is seen at 46.4 (from 46.5) and 48.6 (from 48.6), respectively.
Later on the US docket, all the attention is expected to gyrate around the publication of the FOMC Minutes, seconded by Initial Claims, Durable Goods Orders, flash PMIs, New Home Sales and the final Consumer Sentiment.
What to look for around EUR
EUR/USD trades on a firm note and reaches the mid-1.0300s, as cautiousness keeps the US Dollar under the microscope ahead of the release of the FOMC Minues.
In the meantime, the European currency is expected to closely follow Dollar dynamics, geopolitical concerns and the Fed-ECB divergence. In addition, markets repricing of a potential pivot in the Fed’s policy remains the exclusive driver of the pair’s price action for the time being.
Back to the euro area, the increasing speculation of a potential recession in the region - which looks propped up by dwindling sentiment gauges as well as an incipient slowdown in some fundamentals – emerges as an important domestic headwind facing the Euro on the short-term horizon.
Key events in the euro area this week: EMU, Germany Advanced PMIs (Wednesday) – Germany IFO Business Climate, ECB Accounts (Thursday) – Germany Final Q3 GDP Growth Rate, GfK Consumer Confidence (Friday).
Eminent issues on the back boiler: Continuation of the ECB hiking cycle vs. increasing recession risks. Impact of the war in Ukraine and the persistent energy crunch on the region’s growth prospects and inflation outlook. Risks of inflation becoming entrenched.
EUR/USD levels to watch
So far, the pair is gaining 0.09% at 1.0312 and faces the next up barrier at 1.0395 (200-day Simple Moving Average (SMA)) ahead of 1.0481 (monthly high November 15) and finally 1.0500 (round level). On the flip side, a breach of 1.0222 (weekly low November 21) would target 1.0023 (100-day SMA) en route to 0.9935 (low November 10).
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.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.