EUR/USD well supported above 1.1800 amid mixed FX conditions


  • EUR/USD has traded within tight ranges over the past few hours, holding onto gains made during the European morning.
  • The pair has been largely unfazed by Fedspeak and US data, and could be eyeing a move higher to 1.1900.

EUR/USD has traded within a tight 1.1810-1.1830 range in recent hours, but holds onto gains of slightly more than 20 pips, or 0.2%, on Friday. The pair remains well supported above the 1.1800 level amid broadly subdued USD conditions.

Subdued USD ignores Fedspeak, data

FX markets are mixed today, reflecting a broader lack of risk appetite conviction. US equities are recovering following Thursday’s losses, but crude oil markets again trade in the red. In FX markets, safe-haven JPY is the best G10 performer on the day (despite higher US equity prices) and USD is one of the worst performers.

EUR/USD thus nurses reasonable gains, with price action over the last few hours constrained within tight 1.1810-1.1830 parameters. The pair has been rangebound despite a fair amount of US fundamental news in the form of Producer Price Inflation (PPI) data for October and University of Michigan Consumer Sentiment preliminary data for November, as well as comments from Fed members John Williams, Patrick Harker and James Bullard.

PPI data for October was mixed, with the MoM measure of price growth coming in a little higher than expected at 0.3% (exp. 0.2%) but the YoY measure of price growth coming in a little below expected at 1.1% (exp. 1.2%). Today’s inflation data chimes with softer Consumer Price Inflation (CPI) from earlier in the week, that had the annual rate of Core CPI growth at 1.6% (exp. 1.8%), and shows that price pressures in the US economy remain subdued. In other words, it still looks as though it will be a long time until inflation is sustainably above 2%, what the Fed says it wants to see in order to start thinking about tightening monetary policy again under its new average inflation targeting programme.

Meanwhile, the latest University of Michigan survey on consumer sentiment (the preliminary release of the November survey) made for ugly reading; the headline Consumer Sentiment index dropped to 77.0 against expectations for a small rise from 81.8 to 82.0. Meanwhile, the Consumer Expectations index dropped to 71.3, a larger fall than the expected drop to 78.6 from 79.2. Clearly, virus concerns are weighing more heavily on the consumer than anticipated this month, alongside potential feelings of greater political uncertainty – US President Donald Trump is yet to concede defeat and a small, but a sizeable minority of US voters have indicated that they do not trust the outcome of the election in recent polling.

In terms of today’s Fed speak; NY Fed President John Williams reiterated the points made by Chief Jerome Powell on Thursday (that the economy is doing better than expected and continues to improve but rising virus cases pose a risk), while FOMC member James Bullard struck an upbeat tone, saying there is room for a drop in the unemployment rate to 4.9% in the months ahead and that the current pace of asset purchases has been effective, meaning that policy is presently in a very good place. Fed’s Patrick Harker comments focused mostly on how the pandemic has exacerbated inequality.

EUR/USD building the foundations for a test of 1.1900?

EUR/USD is lower on the week, amid a broadly stronger USD following Pfizer/BioNtech’s positive vaccine update on Monday. But some analysts have argued that the worsening state of the Covid-19 pandemic in the US relative to the Eurozone might work in EUR/USD’s favour (as it arguably did over the summer).

While the pandemic situation in Europe is bad (and most of the continent is still under some form of lockdown), the picture is turning worse at a much faster rate in the US; new reported infections surpassed 160K for the first time on Thursday and on Wednesday, hospitalisations were up to over 65K, a 37% increase on two weeks earlier, while the daily death toll is around 1.5K and has also risen at a pace of nearly 40% over the last two weeks.

Meanwhile, EUR/USD has this week stayed well supported above its 50- and 21-day moving averages (DMAs), which both currently sit at roughly the 1.1775 mark. To the upside, there is not much by way of resistance between current levels and this week’s highs at 1.1920.

EUR/USD additional levels

EUR/USD

Overview
Today last price 1.1823
Today Daily Change 0.0016
Today Daily Change % 0.14
Today daily open 1.1807
 
Trends
Daily SMA20 1.1775
Daily SMA50 1.177
Daily SMA100 1.1701
Daily SMA200 1.1349
 
Levels
Previous Daily High 1.1823
Previous Daily Low 1.1759
Previous Weekly High 1.1891
Previous Weekly Low 1.1603
Previous Monthly High 1.1881
Previous Monthly Low 1.164
Daily Fibonacci 38.2% 1.1798
Daily Fibonacci 61.8% 1.1783
Daily Pivot Point S1 1.177
Daily Pivot Point S2 1.1732
Daily Pivot Point S3 1.1705
Daily Pivot Point R1 1.1834
Daily Pivot Point R2 1.1861
Daily Pivot Point R3 1.1898

 

 

 

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