EUR/USD Faces Bearish Pressure as the Dollar Gains Ground

20 окт. 2023 г.

EUR/USD Faces Bearish Pressure as the Dollar Gains Ground

The Euro (EUR) is currently on the backfoot against the US Dollar (USD), causing the EUR/USD pair to retreat below the 1.0570 level, signaling a fresh bearish sentiment.

In the meantime, the US Dollar has managed to regain some strength, with the USD Index (DXY) making modest gains in the low-106.00s. This rebound in the US Dollar can be attributed to a corrective retracement in US yields across the yield curve and a shift in market sentiment regarding risk.

When it comes to monetary policy, investors are now expecting the Federal Reserve (Fed) to maintain its current stance of keeping interest rates unchanged during the November meeting. This outlook was reinforced by comments from Fed Chairman Jerome Powell on Thursday.

On the other hand, participants in the financial markets are contemplating the possibility of the European Central Bank (ECB) discontinuing its policy measures. This comes despite inflation levels exceeding the bank's target and growing concerns about the risk of an economic slowdown or stagflation in the European zone.

As the week comes to a close, the European economic calendar remains empty. There are no significant data releases scheduled across the ocean either. However, investors are likely to closely monitor speeches by Cleveland Fed's Loretta Mester (2024 voter, hawk) and Philadelphia Fed's Patrick Harker (voter, hawk).

From a technical analysis standpoint, our assessment points toward the EUR entering a new bearish phase after retesting the 78.6% Fibonacci resistance zone. The next potential target for the EUR/USD pair is situated at 1.05000, signaling a challenging road ahead for the Euro in the currency markets.



Short-Term | Our preference

Short positions below 1.0640 with targets at 1.0500 & 1.0450 in extension.