The EUR/USD pair continues its upward trajectory, touching a two-week high at 1.0620 before retracing to 1.0600. An improving market sentiment and a corrective phase for the US Dollar underpin this surge. Geopolitical concerns and incoming US inflation data take centre stage for market watchers.
The EUR/USD investing is experiencing a continued downturn, extending its correction from multi-month peaks. Lower US yields, with the 10-year Treasury yield at 4.6% and the 2-year yield back below 5.0%, are further weighing down the Greenback. The DXY has dipped below 106.00, while Wall Street stocks see an upward trend.
US Dollar Faces Headwinds from Lower Treasury Yields
Attention now shifts to vital US inflation data, with the Producer Price Index (PPI) slated for Wednesday, followed by the Consumer Price Index (CPI) on Thursday. Furthermore, the release of the FOMC minutes will offer insights into the Federal Reserve’s monetary policy outlook.
Germany’s final Consumer Price Index reading is expected on Wednesday, with no revisions anticipated from the preliminary figures indicating an annual rate of 4.5% in September. The combination of a marked deceleration in inflation in Europe and a pessimistic economic outlook suggests the European Central Bank will likely hold off on further interest rate hikes.
EUR/USD Investing Short-term Technical Overview
While the EUR base rate exhibits signs of a possible short-term bottom around 1.0450, a more convincing confirmation requires the Euro to stay above the 20-day Simple Moving Average (SMA) at 1.0595. Nevertheless, it’s crucial to note that the overarching trend remains bearish.
On the 4-hour chart, the pair faces a significant resistance zone around 1.0630, defined by a horizontal level and a downtrend line. A successful breach of this area could pave the way for further advances. Conversely, a failure to surpass this level might indicate a waning recovery, with a drop below 1.0560 suggesting potential weakness.
EUR to USD Technical Analysis
Over on the hourly chart of EUR to USD at FXOpen, the pair has initiated a recovery from the 1.0450 level. The Euro has successfully cleared the 1.0485 barrier, entering a short-term bullish phase against the US Dollar.
Bulls have propelled the pair above the 50-hour simple moving average and 1.0570. Presently, it is consolidating gains above the 23.6% Fib retracement level of the upward wave from the 1.0519 swing low to the 1.0619 high.
Euro Encounters Tight Range Near 1.0600 Ahead of Key US Data
The Euro’s trading pattern against the US Dollar remains indecisive, with European stocks reversing an initial dip. While the Euro struggles for fresh upward momentum, the USD Index (DXY) hovers near monthly lows around 105.70.
Final CPI figures in Germany reveal a 4.5% year-on-year increase and a 0.3% month-on-month rise in September. Meanwhile, all eyes are on the US Producer Prices and FOMC Minutes, set to take centre stage later in the session.
Technical Analysis: Best Time to Trade EUR/USD
The EUR/USD investing appears poised for consolidation after breaching the pivotal barrier at 1.0600. Continued upward momentum may lead to a revisit of the September 20 high at 1.0736, followed by the significant 200-day Simple Moving Average (SMA) at 1.0823. A sustained breakthrough could see the pair testing higher thresholds.
Conversely, if selling pressure resumes, a retest of 2023 low at 1.0448 from October 3 is possible, with potential challenges to the psychological level of 1.0400. As long as the EUR/USD remains below the 200-day SMA, sustained downward pressure remains a possibility.