Daily Price Outlook
The EUR/USD currency pair faced difficulties in mounting any significant bullish momentum during the European trading session, and it primarily hovered around the 1.0700 mark. The pair struggled to find a definitive trend despite a dip in US Treasury bond yields and a robust performance in US equities markets. The US Dollar has experienced a rebound this week from its lowest level since September 20, benefitting from its status as a safe-haven currency, which in turn has applied downward pressure on the EUR/USD pair.
Mixed Signals from the US Central Bank and Market Sentiments
The markets are still digesting the signals from the US central bank from last week, which suggested that the existing financial conditions might be adequate to address inflation concerns. This has fueled market speculation that the Federal Reserve (Fed) may have concluded its cycle of tightening monetary policy. Moreover, a less robust US jobs report released on Friday has solidified the belief that the Fed will not alter its policy path significantly in December.
However, some officials from the Fed have indicated a bullish stance on the US economy's resilience, leaving the door open for further interest rate hikes. This has provided some strength to the US Dollar.
Traders are likely to hold back from placing significant trades until they hear from Fed Chair Jerome Powell later in the North American session. Concurrently, the weaker-than-expected German Industrial Production data for September, released on Tuesday, could continue to pressure the Euro, potentially curbing any upward movement for the EUR/USD pair.
Factors Influencing EUR/USD Dynamics
The perception that the European Central Bank (ECB) may not be in a position to raise interest rates imminently could also weigh on the Euro, creating additional headwinds for the EUR/USD currency pair. Market participants are now looking towards the final German Consumer Price Index (CPI) and the Eurozone Retail Sales data for further clues on the pair’s direction before Powell’s speech.
It remains essential to monitor the trajectory of US bond yields and general market sentiment, as these will affect the USD's strength and could provide short-term trading opportunities for the EUR/USD currency pair.
EUR/USD - Technical Analysis
As the financial markets wake on November 8, the EUR/USD pair exhibits a subtle downward movement of 0.09%, resting at 1.06898. The four-hour chart provides a clear picture of the currency pair's current stance, wavering slightly below the previous session's close.
The pivot point for the day stands at $1.0664, with immediate resistance forming near the $1.0810 mark. Should the pair gain momentum, subsequent ceilings at $1.0892 and $1.1044 may come into play. Conversely, support levels are identified at $1.0579, followed by $1.0433 and $1.0351, which could provide a cushion should a downward trend persist.
The Relative Strength Index (RSI) sits at a moderate 54, suggesting a cautiously bullish sentiment as it remains above the midpoint of 50. The Moving Average Convergence Divergence (MACD) hovers around the baseline, not indicating a clear trend, leaving traders to look for other clues. Notably, the price floats above the 50-Day Exponential Moving Average (EMA) set at $1.0649, pointing to a potential short-term bullish trend.
A notable sideways channel breakout pattern has been observed, suggesting a possible consolidation phase. The implications of such a breakout will be critical for the EUR/USD pair, potentially setting the stage for an ensuing trend.
In conclusion, the technical outlook for the EUR/USD on November 8 indicates a cautiously optimistic view. If the currency remains above the $1.0649 level, it could reinforce the bullish scenario. Traders may expect the pair to challenge the immediate resistance levels in the short term, with the overarching trend likely to be revealed by further market developments.
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