EUR/USD Analysis – November 16, 2021

Pivot Point Breakout

The EUR/USD closed at $1.1367 after hitting a high of $1.1465 and a low of $1.1356. The EUR/USD pair fell for the sixth consecutive session on Monday, reaching its lowest level since July 2020 amid renewed strength in the US dollar. The US dollar was strong, with the DXY reaching 95.60 and US Treasury yields on the benchmark 10-year note reaching 1.63%. The greenback gathered strength over the basket of six major currencies and weighed on the currency pair EUR/USD.

On Monday, the President of the European Central Bank, Christine Lagarde, pushed back on calls and market bets for tighter policy by saying that tightening monetary policy now to rein in inflation could choke off the euro zone’s recovery. Lagarde stressed that the ECB was coming under increased pressure to abandon its ultra-easy monetary policy and tackle price growth as inflation was already twice its 2% target, with prospects of further moving higher later this year.

Lagarde also admitted that inflation will spike higher and longer than once thought but maintained that it would fade next year, so policy action now would hit the economy just as price growth starts to moderate on its own. She repeated that conditions for a rate hike in 2022 were improbable to be met, but she also said she could not make a similar commitment for the following year. These comments from Lagarde added further pressure on the single currency, the Euro, and dragged the EUR/USD pair further to the downside.

On the data front, at 15:00 GMT, the trade balance from September dropped to 6.1B against the forecasted 12.5B and weighed on the single currency Euro, which ultimately added to the further decline in the EUR/USD pair. From the US side, the Empire State Manufacturing Index increased to 30.9 against the projected 22.1 and supported the US dollar, which added to the further decline in EUR/USD prices on Monday.

Furthermore, coronavirus case numbers increased by more than 50% across the continent, raising concerns about further spread due to the winter season. According to WHO, nearly 2 million cases were reported across Europe during the previous week, the most cases the region has had in a single week since the pandemic began.

Meanwhile, Austria imposed a lockdown on unvaccinated people on Monday as winter approached and infections rose across the region. Germany was also considering tighter curbs, and Britain expanded its booster program to younger adults. All these coronavirus concerns added further weight to the single currency euro, adding to the additional loss in the EUR/USD pair.

EUR/USD Intraday Technical Levels

Support Resistance

1.1327 1.1436

1.1287 1.1505

1.1218 1.1545

Pivot Point: 1.1396

EUR/USD - Technical Outlook

On Tuesday, the EUR/USD is trading with a bearish bias at 1.1356 level, having violated the narrow trading range of 1.1465-1.1445. On the 4-hour timeframe, the EUR/USD has formed bearish engulfing candles that is supporting the pair at 1.1356 level. An intraday pivot point level has already been violated that’s supporting selling bias in the EUR/USD pair. It’s working as a resistance at 1.1396 level. A break below the 1.1356 level exposes the EUR/USD pair towards 1.1327 and 1.1287 levels on the bearish side.

A break above the 1.1395 level exposes the EUR/USD pair towards the 1.1434 and 1.1465 levels. Further on the higher side, the EUR/USD’s next resistance holds around 1.1503 level. The RSI and Stochastic are holding in a sell zone. Therefore, the EUR/USD’s trading bias remains bearish below 1.1395 and vice versa. All the best!

All the best!