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EUR/USD remains on the defensive, holds above mid-1.0500s as traders await US PCE Price Index

  • EUR/USD trades with a mild negative bias for the fourth successive day on Friday.
  • An uptick in the US bond yields acts as a tailwind for the USD and exerts pressure.
  • The ECB’s dovish outlook undermines the Euro and contributes to the offered tone.

The EUR/USD pair struggles to capitalize on the previous day's bounce from the 1.0520 area, or over a one-week low and edges lower during the Asian session on Friday. Spot prices trade with a mild negative bias for the fourth straight day, albeit manage to hold just above mid-1.0500s.

A modest uptick in the US Treasury bond yields acts as a tailwind for the US Dollar (USD), which, along with the European Central Bank's (ECB) dovish outlook, turns out to be a key factor acting as a headwind for the EUR/USD pair. Despite signs of easing inflationary pressures in the US, the Federal Reserve (Fed) is expected to stick to its hawkish stance and keep rates higher for longer in the wake of the resilient US economy.

The bets were reaffirmed by the US macro data released on Thursday, which showed that the economy expanded by a 4.9% annualize pace during the third quarter as compared to the 4.2% growth estimated. Furthermore, the US Durable Goods Orders shot up by 4.7% in September, also beating market expectations. This, along with the European Central Bank's (ECB) dovish outlook, continues to weigh on the EUR/USD pair.

As was anticipated, the ECB decided to leave rates unchanged, ending its unprecedented streak of 10 consecutive increases in borrowing costs amid rising concerns over eurozone growth. In the post-meeting press conference, ECB President Christine Lagarde said that growth was likely to remain weak over the remainder of the year as the impact of higher interest rates was broadening, though did not rule out another rate increase.

Traders, meanwhile, seem reluctant to place aggressive bearish bets around the EUR/USD pair ahead of the release of the US Core PCE Price Index – the Fed's preferred inflation gauge. The data will influence market expectations about the Fed's future rate-hike path, which, in turn, will drive the USD demand and provide a fresh impetus to the major. Nevertheless, spot prices remain on track to register modest weekly losses.

Technical levels to watch

EUR/USD

Overview
Today last price1.0559
Today Daily Change-0.0004
Today Daily Change %-0.04
Today daily open1.0563
 
Trends
Daily SMA201.0561
Daily SMA501.0666
Daily SMA1001.0821
Daily SMA2001.0815
 
Levels
Previous Daily High1.0574
Previous Daily Low1.0522
Previous Weekly High1.0617
Previous Weekly Low1.0511
Previous Monthly High1.0882
Previous Monthly Low1.0488
Daily Fibonacci 38.2%1.0542
Daily Fibonacci 61.8%1.0554
Daily Pivot Point S11.0532
Daily Pivot Point S21.0501
Daily Pivot Point S31.048
Daily Pivot Point R11.0584
Daily Pivot Point R21.0605
Daily Pivot Point R31.0636

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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