EUR/USD: Profit-taking slide to extend ahead of ECB decision?

Dhwani Mehta FXStreet

The EUR/USD pair extends its gradual retreat from multi-month tops of 1.1583 reached a day before, as broad based US dollar recovery gathers steam in tandem with the Treasury yields rebound.

EUR/USD looks to test daily pivot at 1.1534

The corrective slide in the EUR/USD pair gained traction in the Asian trades, as the US dollar extended its recovery-mode from eleven-month troughs of 94.27 levels reached against its main competitors, as the rejection of Trump’s Healthcare bill by the Senate Republicans re-ignited concerns over the Trump administration and its capability to deliver on the promised tax reforms.

Adding to the greenback weakness yesterday, mixed US macro news aggravated concerns over dwindling US economic recovery, which could very well keep the Fed away from raising rates this year.

On the other hand, markets are widely expecting the ECB to make a hawkish announcement tomorrow at its policy decision, signaling at QE tapering as early as this September. Hence, the spot also benefited from narrowing monetary policy divergence, while ignoring dismal German ZEW surveys.

German ZEW economic sentiment deteriorates further in July

Looking ahead, the correction in the major could extend further, in a bid to test the key resistance-turned support of 1.1500 levels, in the wake of profit-taking ahead of the ECB decision. Moreover, markets believe the rally is overdone and as excessive and hence, further downside cannot be ruled out.

Data-wise, focus shifts towards the US housing starts and building permits data due later in the NA session, as we have an empty EUR calendar today.

EUR/USD Technical Set-up

According to Valeria Bednarik, Chief Analyst at FXStreet, “In the 4 hours chart, the price holds far above all of its moving averages, whilst technical indicators have turned lower, but remain within overbought territory, indicating limited selling interest around the pair. Support levels: 1.1525 1.1490 1.1460 Resistance levels 1.1580 1.1615 1.1645.”

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.