EUR/USD flat lines below mid-1.1600s; bulls await move beyond 50-day SMA amid weaker USD
- EUR/USD bulls pause for a breather following the recent rise to an over two-week high.
- The prevalent USD selling bias supports spot prices and backs the case for further gains.
- The divergent Fed-ECB expectations validate the near-term positive outlook for the pair.
The EUR/USD pair is seen oscillating in a narrow range during the Asian session on Friday and consolidating its recent strong gains to an over two-week high, touched the previous day. Spot prices currently trade around the 1.1635 area, nearly unchanged for the day and below the 50-day Simple Moving Average (SMA) pivotal barrier.
The US Dollar (USD) struggles attract any meaningful buyers and languishes near a two-week low touched on Thursday amid concerns about the potential economic fallout from a prolonged US government shutdown. This, in turn, is seen as a key factor acting as a tailwind for the EUR/USD pair. Apart from this, the divergent Federal Reserve (Fed)–European Central Bank (ECB) policy expectations offer support to the currency pair and back the case for an extension of a two-week-old uptrend.
A growing number of Federal Reserve policymakers signaled caution on further easing amid the lack of economic data. Traders, however, are still pricing in a 50% possibility that the US central bank will lower borrowing costs in December. In contrast, a majority of economists expect that the ECB will hold its deposit rate this year and see no change by the end of next year. This validates the positive outlook for the EUR/USD pair, though bulls need to wait for a break through the 50-day SMA.
Meanwhile, a senior White House official said that key economic reports for October – employment details and inflation data – may not be released at all. Hence, traders will continue to scrutinize comments from influential FOMC members for cues about the Fed's rate-cut path, which, in turn, will drive the USD demand. Apart from this, the release of the flash Eurozone Q3 GDP print could provide some impetus to the Euro (EUR) and produce trading opportunities around the EUR/USD pair.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.68% | -0.01% | 0.31% | -0.22% | -0.81% | -1.04% | -1.62% | |
| EUR | 0.68% | 0.65% | 1.02% | 0.43% | -0.16% | -0.40% | -0.98% | |
| GBP | 0.01% | -0.65% | 0.45% | -0.22% | -0.80% | -1.04% | -1.62% | |
| JPY | -0.31% | -1.02% | -0.45% | -0.58% | -1.16% | -1.39% | -2.01% | |
| CAD | 0.22% | -0.43% | 0.22% | 0.58% | -0.50% | -0.83% | -1.47% | |
| AUD | 0.81% | 0.16% | 0.80% | 1.16% | 0.50% | -0.24% | -0.82% | |
| NZD | 1.04% | 0.40% | 1.04% | 1.39% | 0.83% | 0.24% | -0.58% | |
| CHF | 1.62% | 0.98% | 1.62% | 2.01% | 1.47% | 0.82% | 0.58% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
