EUR/USD Pauses, Awaiting FOMC and CPI!

10 окт. 2023 г.

The EUR/USD exchange rate is above 1.0550, supported by a slight decline in the US dollar and decreasing US bond yields, while a positive risk tone weakens the dollar. Traders are awaiting key data for the week, including FOMC minutes and the US Consumer Price Index. The EUR/USD is below the 20-day Simple Moving Average (SMA) and within a downtrend channel, but in the short term, it shows signs of stability, suggesting a possible test of key resistance levels. On the 4-hour chart, the price is above the 20-period SMA and consolidated above 1.0560, with the next resistance at 1.0580 and potential testing of last week's highs at 1.0600. The short-term bullish bias remains intact as long as the price stays above 1.0530, but a break below 1.0520 could target the area of 1.0500, indicating further weaknesses ahead. During the American session, the EUR/USD rose but remained below Friday's close, as the weakness of the US dollar was not sufficient to push the pair above 1.0600, and the euro was the weakest among the G10 currencies on Monday. New geopolitical concerns particularly weighed on the euro, causing it to decline against other major currencies. The 10-year German bond yield dropped by over 4.50% to 2.76%, with EUR/CHF sliding towards 0.9550, and EUR/GBP falling below 0.8640. Data showed a 0.2% decrease in German industrial production in August, worse than the expected 0.1% decrease. Investor confidence in the Eurozone also dropped in October to -21.9, higher than the market consensus of -25. No significant reports are scheduled for release on Tuesday in either the Eurozone or the US. The key figure of the week will be the US Consumer Price Index on Thursday. The US dollar strengthened across the board during the American session, benefiting from an improvement in risk sentiment following the market opening after Hamas' attack in Israel. The US Dollar Index (DXY) peaked at 106.60 but then pulled back to 106.00, ending with modest losses due to a decline in US bond yields. Additionally, on the H4 chart, the price is within a strong demand zone at the 1.0560-1.0480 level, and in this zone, a strong long reaction is expected for an upward continuation to the 1.0645 level, where we have an H4 supply zone and a downtrend trendline. The price in the Asian session has made a swing high, which could hinder the price's further rise. It will be important to assess the New York opening today to evaluate any position-taking. Looking forward to your feedback, comments, and likes. Greetings from Nicola, CEO of Forex48 Trading Academy.