- Since the start of this week's trading, the price of the currency pair EUR/USD has been moving in narrow ranges between the resistance level of 1.0756 and the support level of 1.0659, and stabilized around the level of 1.0710 at the beginning of trading on Thursday, ahead of the announcement of the number of American jobless claims and new statements by the Governor of the American Central Bank Jerome Powell.
- This week, the Eurodollar reacted a lot to statements made by many US Central Bank policy officials and also European Central Bank policy officials.
- All of them indicate the possibility of moving in the tightening path for a period of time, which explains the neutrality of the recent performance of the currency pair.
Strong Data Support the US Dollar
Recently, the US dollar has continued its recovery against all other major currencies, with several US Federal Reserve officials reminding investors that the door to further rises is still open. Federal Reserve Governor Christopher Waller said yesterday that the 4.9% GDP growth rate for the third quarter was a “strong” performance worth closely monitoring, while Governor Bowman said she took the number as evidence that the economy not only “remained strong,” but also gained speed. Although Waller did not specifically indicate whether additional increases would be needed, Bowman said a growing economy may actually require a higher interest rate.
On the economic side, the EUR/USD currency pair is trading influenced by the results of recent economic data. The performance of retail sales in the European Union for September exceeded the expected change (on an annual basis) of -3.2%, recording a change of -2.9%. The equivalent (monthly) missed expectations by -0.2%, recording a change of -0.3%. In Germany, the consolidated CPI for October matched expectations (monthly) and (annual) of 0.2% and 3%, respectively. On the other hand, the Consumer Price Index for this period was in line with estimates of 0% (monthly) and 3.8% (annual).
In the United States of America, applications for mortgage loans in November increased by 2.5% compared to a change of -2.1% in the previous update. On the other hand, wholesale inventories for September came in below the expected 0% change with a change of 0.2%. Earlier in the same week, September consumer credit fell below the expected $10 billion figure with a figure of $9.06 billion. The trade balance of goods and services for this period also failed to match estimates of -60.2 billion dollars, recording a reading of -61.5 billion dollars.
EUR/USD Today Expectations and Analysis
The EUR/USD has now rallied to trade above the 100-hour moving average line on the hourly chart. As a result, the EUR/USD currency pair appears to be approaching the overbought levels of RSI 14. In the near term and based on the hourly chart, the EUR/USD currency pair appears to have completed an upward breakout from the descending channel formation. Also, the MACD indicator for this period also appears to be supporting the uptrend as it completes a bullish crossover. Therefore, the bulls will look to extend the current bounce towards 1.0744 or higher to the 1.0780 resistance. On the other hand, the bears will look to pounce on pullbacks at around 1.0667 or lower at the 1.0628 support.
In the long term, and according to the performance on the daily chart, it appears that the EUR/USD currency pair is trading within an upward channel. Also, the daily MACD also appears to be supporting an uptrend after completing a bullish crossover. Therefore, the bulls will look to ride the current rally towards 1.0915 or higher to the 1.1075 resistance. On the other hand, the bears will look to pounce on profits at around 1.0540 or lower at the 1.0331 support.
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