For six trading sessions in a row, the price of the euro currency pair against the US dollar “EUR/USD” moved amid selling operations that pushed it towards the support level of 1.0757. Currently, EUR/USD was stable around it at the time of writing the analysis and the lowest for the currency pair two weeks ago. Recently, the selling waves for the currency pair increased amid renewed investor interest in buying the US dollar prior to the announcement of the US job numbers this week. hence, this will have a strong and direct reaction to the future tightening of the US Central Bank’s policy. In addition to negatively affecting the euro amid growing expectations that the European Central Bank will be proactive in the pace of reducing interest rates.
In general, the Forex market will witness many anticipated and important announcements this week. Moreover, these data include the US non-farm payrolls report, quarterly GDP growth rate numbers for several countries (including the Eurozone). Also, the start of interest rate decisions in December, which have already begun with Australia and Canada and will culminate in announcements from the US Federal Reserve and the Bank of England next week.
On the ECB policy front, ECB member Isabel Schnabel, who is considered a hawk, said that given the “significant” decline in inflation, the ECB could refrain from raising interest rates further. However, she added that they should not direct interest rates to remain fixed Until mid-2024. Although, this is not something markets disagree with, her comments encouraged participants to place their bets on a rate cut, with a quarter-point cut now almost entirely in place in March. Overall, expectations that the ECB will cut interest rates sooner than the Fed may leave the euro vulnerable, even if the dollar resumes its decline against other major currencies soon.
On the economic side, the EUR/USD is trading influenced by the results of recent economic data. EU retail sales for October exceeded the expected (y/y) change of -1.1% with a change of -1.2%. also, the Equivalent (monthly) exceeded the estimate of 0.2% with a change of 0.1%. Seasonally adjusted German factory orders for October came in less than the expected (monthly) change of 0% with a change of -3.7%. Earlier in the same week. Otherwise, the EU HCOB Composite PMI for November beat estimates of 47.1 with a reading of 47.6.
On the other hand, in the United States, the performance of the ISM Services PMI for November exceeded expectations at 52 with a reading of 52.7. nearby, The October JOLTS job openings rate exceeded the estimate of 9.3 million for a total of 8.733 million. Yesterday, the rate of change in US non-farm payrolls (ADP) for November also fell to less than 130 thousand with a total of 103 thousand. Furthermore, Non-farm productivity for the third quarter exceeded expectations of 4.9% with a change of 5.2%, while unit labor costs exceeded expectations by -0.9% with a change of -1.2%.
EUR/USD technical Analysis Today:
EUR/USD remains several levels below the 100-hour moving average line despite the bounce. Consequently, it appears that the currency pair still has plenty of room to move before reaching the overbought levels of the RSI on the 14-hour frame. In the near term, and according to the performance on the hourly chart, it appears that the EUR/USD is trading within a descending channel formation. The 14-hour RSI also seems to indicate that the market remains indecisive in the short term. Therefore, bears will target potential downside profits at around 1.0750 or lower at 1.0710 support. On the other hand, the bulls - the bulls - will be looking to pounce on profits at around 1.0811 or higher at 1.0831.
In the long term, and according to the performance on the daily chart, it appears that the EUR/USD has recently completed a downward breach from the formation of an ascending channel. Obviously, this indicates a significant change in long-term market sentiment from bullish to bearish. Therefore, the bears will target extended pullbacks at around 1.0675 or lower at the 1.0563 support. furthermore, the bulls - the bulls - will target long-term profits at around 1.0903 or higher at the 1.1020 resistance.
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