EUR/USD drops from 0.9880, upside remain favored amid hawkish ECB bets

EUR/USD has displayed a mild correction amid a marginal DXY recovery.
The risk-on profile is intact as S&P 500 futures are stuck to their extended gains.
ECB Lagarde may announce a rate hike by 75 bps to curtail price pressures.

Sagar Dua FXStreet

The EUR/USD pair has witnessed selling pressure after multiple failed attempts to overstep the critical hurdle of 0.9880. The asset has not turned bearish yet, as the risk profile is exceptionally cheerful. This could be merely a healthy correction in the asset’s upside journey.

S&P500 futures have extended their gains after an upbeat Tuesday, which indicates that the market mood is solid. Meanwhile, the US dollar index (DXY) is defending the downside bias and holding itself above 112.00. The 10-year US Treasury yields have accelerated above 4.02%.

The euro bulls are expected to turn toward the north amid soaring bets for European Central Bank (ECB)’s hawkish monetary policy. Reuters poll on ECB’s rate hike extent states that ECB President Christine Lagarde will step up the interest rates by 75 basis points (bps) on October 27. European Harmonized Index of Consumer Prices (HICP) trades five times higher than the targeted rate of 2%. Therefore, efficiency in policy tightening is required to contain mounting inflation.

The outcome of a Reuters poll states that the bloc's central bank will take the deposit rate to 1.50% and the refinancing rate to 2.00%.

On the US docket, recession fears are accelerating as the Federal Reserve (Fed) prepares to announce one more bumper rate hike in the first week of November. Price pressures have not softened in response to the pace of the Fed’s rate hiking spell. And Fed’s main agenda is to bring price stability.

Going forward, Wednesday’s Housing Starts data that reflects retail demand for real estate will hog the limelight. The economic data is expected to decline to 1.475M against the former release of 1.575M. It seems that accelerating interest rates by the Federal Reserve (Fed) have started displaying their consequences. Higher interest rates are forcing retailers to postpone their demand for personal property.

EUR/USD

Overview
Today last price	0.985
Today Daily Change	-0.0005
Today Daily Change %	-0.05
Today daily open	0.9855

Trends
Daily SMA20	0.9772
Daily SMA50	0.9934
Daily SMA100	1.0144
Daily SMA200	1.0563

Levels
Previous Daily High	0.9876
Previous Daily Low	0.9813
Previous Weekly High	0.9809
Previous Weekly Low	0.9632
Previous Monthly High	1.0198
Previous Monthly Low	0.9536
Daily Fibonacci 38.2%	0.9852
Daily Fibonacci 61.8%	0.9837
Daily Pivot Point S1	0.982
Daily Pivot Point S2	0.9785
Daily Pivot Point S3	0.9757
Daily Pivot Point R1	0.9883
Daily Pivot Point R2	0.9911
Daily Pivot Point R3	0.9946

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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