EUR/USD Analysis – November 17, 2021

Pivot Point Breakout

The EUR/USD closed at $1.1319 after setting a high of $1.1386 and a low of $1.1309. The EUR/USD currency pair dropped for the sixth consecutive session on Tuesday and reached its lowest since July 2020 amid the renewed strength of the US dollar. The US dollar index was higher on board as it reached near the 96.00 level and added strength to the greenback that dragged EUR/USD further to the downside. While the US Treasury yield on the benchmark 10-year note increased, the US dollar strengthened, resulting in a loss for the EUR/USD pair.

On the data front, at 12:45 GMT, the French Final CPI remained flat with expectations of 0.4%. At 15:00 GMT, the Flash Employment Change surged to 0.9% against the forecasted 0.6% and supported the single currency euro, which capitulated further losses in the EUR/USD pair. Flash GDP for the quarter also remained flat, with expectations of 2.2%.

From the US side, at 18:30 GMT, the Core Retail Sales for October rose to 1.7% against the projected 1.0% and supported the US dollar. That added further pressure on EUR/USD. Retail sales increased to 1.7%, versus the expected 1.3%, bolstering the US dollar and dragging EUR/USD lower. Import prices in October also increased to 1.2%, against an estimated 1.0%, and supported the US dollar, which ultimately dragged EUR/USD to the downside.

At 19:15 GMT, industrial production had also increased to 1.6%, versus the expected 0.9%, and the greenback had added to the EUR/USD loss. The Capacity Utilization Rate also surged to 76.4% against the predicted 75.9% and added strength to the US dollar that kept EUR/USD to the downside. At 20:00 GMT, business inventories had risen to 0.7%, versus the expected 0.6%, weighing on the US dollar, which had succumbed to further losses in the EUR/USD. The NAHB Housing Market Index soared to 83 from the expected 80 and underpinned the greenback, further declining EUR/USD.

Additionally, ECB President Christine Lagarde said that tightening monetary policy now to rein in inflation could choke off the recovery of the euro zone’s economy. She kept pushing back on rate hike bets and hopes despite inflation being twice the 2% target of the ECB.

On the other hand, Richmond Federal Reserve President Thomas Barkin stated that it might take several months for the Fed to determine whether high inflation and labor shortages resulting from the pandemic will eventually subside or if they reflect more long-term changes in the economy. These comments from Fed officials added further strength to the US dollar, which ultimately dragged the EUR/USD currency pair to the downside.

EUR/USD Intraday Technical Levels

Support Resistance

1.1290 1.1367

1.1261 1.1415

1.1212 1.1444

Pivot Point: 1.1338

EUR/USD - Technical Outlook

The EUR/USD continues to fall dramatically, with the pair plunging to 1.1261 on Wednesday. During the early Asian session, the EUR/USD violated an intraday pivot point support level of 1.1337, and now it’s operating as a resistance. The closing of candles below this pivot point confirms the bearish breakout and strengthens the bearish trend.

With that being said, the EUR/USD’s immediate support stays at the 1.1290 level, and a break below this exposes the pair towards the 1.1260 and 1.1213 levels. Conversely, the pivot point works as resistance at the 1.1337 level, and a bullish crossover above 1.1337 exposes the pair towards 1.1385 and 1.1415 levels.

The RSI and Stochastic indicators have entered the oversold zone, and typically such situations trigger a bullish bounce-off/correction in the market. All the best!