Technical Analysis

EUR/USD Price Analysis – Nov 01, 2023

By LonghornFX Technical Analysis
Nov 1, 20233 min

Daily Price Outlook

Despite the sluggish performance of the US dollar, the EUR/USD currency pair failed to halt its losing streak and remained under pressure, trading around the 1.0558 level, reflecting a 0.17% loss for the day. However, the ongoing decline in this currency pair can be attributed to recent official data published by Eurostat, indicating a sharp deceleration in the Eurozone Harmonised Index of Consumer Prices (HICP) on Tuesday.

Furthermore, the expectations that the European Central Bank (ECB) won't further increase interest rates have significantly influenced the downward pressure on the EUR/USD pair. Moreover, concerns about looming recession risks continue to weaken the shared currency.

Eurozone Consumer Price Growth Slows, ECB Rate Hike Expectations Diminish

According to the latest Eurostat data released on Tuesday, the Eurozone's consumer price growth, as measured by the Harmonised Index of Consumer Prices (HICP), slowed significantly from 4.3% to 2.9% annually in October. This deceleration represents the lowest increase in prices since July 2021, further solidifying market beliefs that the European Central Bank (ECB) is unlikely to raise interest rates. Moreover, concerns about a potential recession may continue to exert pressure on the shared currency, potentially creating hurdles for the EUR/USD pair.

US Dollar Pauses as FOMC Meeting Looms

On the flip side, the US Dollar has paused its robust upward movement, as traders adopt a wait-and-see approach pending the outcome of the pivotal FOMC meeting before making new market moves. The Federal Reserve (Fed) is anticipated to maintain current interest rates for the second time, potentially leaving open the possibility for a hike later this year.

Therefore, the expectations for a more hawkish stance from the Fed are bolstering higher US bond yields, consequently lending strength to the dollar contributes to the EUR/USD pair losses.

Key Events Ahead for Traders and the EUR/USD Pair

Looking ahead, traders are closely monitoring key events such as the ADP private-sector employment report, the ISM Manufacturing PMI, and JOLTS Job Openings data in the US. These factors will influence the demand for the safe-haven US Dollar.

EUR/USD Price Chart – Source: Tradingview
EUR/USD Price Chart – Source: Tradingview

EUR/USD - Technical Analysis

The pivot point, a critical juncture in technical analysis, is pegged at 1.0595. Should bullish sentiment prevail, immediate resistance lies at 1.0667, followed by subsequent barricades at 1.0768 and 1.0840. Conversely, if bearish undercurrents dominate, the currency pair might seek solace at immediate support levels of 1.0492, with further cushions at 1.0422 and 1.0321.

Delving deeper into technical indicators, the Relative Strength Index (RSI) stands at 46. This sub-50 reading indicates a bearish sentiment among traders, albeit not entrenched deeply into oversold territory. The 50-Day Exponential Moving Average (EMA) further corroborates this stance, with the pair trading slightly below the EMA value of 1.0582, suggesting a short-term bearish trend.

Chart patterns are yet to pronounce a definitive direction, with the currency pair's trajectory poised delicately at crucial junctures. However, the overall trend tilts towards the bearish side, contingent on the pair's movements relative to the 1.0582 mark. Short-term forecasts remain cautious, with a likelihood of the EUR/USD pair testing key resistance and support levels in the days ahead.

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