EUR/USD Price Analysis – Nov 10, 2023

Daily Price Outlook

During the European session on Friday, the EUR/USD currency pair extended its downtrend, remaining under pressure, and currently hovers near the lower end of the weekly range, just above the mid-1.0600s. However, this decline can be attributed to the strength of the US Dollar. Notably, hawkish remarks from Fed officials and a more cautious market sentiment bolster the safe-haven appeal of the greenback, contributing to the losses in the EUR/USD pair. Furthermore, mixed signals regarding the European Central Bank's (ECB) next policy move were seen as another key factor keeping the EUR/USD pair on a downward trajectory.

Impact of Hawkish Fed Comments on USD and Global Markets

It's worth noting that the broad-based US Dollar is standing strong near a one-week high, driven by hawkish comments from Federal Reserve (Fed) officials, including Chair Jerome Powell. Their statements expressed uncertainty about whether interest rates are high enough to effectively combat inflation. Powell, speaking at an International Monetary Fund event, acknowledged the slowing pace of inflation but expressed reservations about the adequacy of current monetary policy.

These remarks revived expectations for another interest rate hike by the US central bank, causing a rise in yields and supporting the USD. Furthermore, concerns about China's economic conditions and a weak 30-year Treasury bond auction led to a decline in US equity markets, supporting the US dollar's safe-haven appeal and limiting gains for the EUR/USD pair.

Challenges for Euro amid Mixed Signals on ECB Policy Decisions

Furthermore, the mixed signals regarding the European Central Bank's (ECB) upcoming policy decisions have played its major role in undermining the EUR/USD pair. Notably, the market suggests a 30% chance of a rate cut in March. Despite this, Vice President Luis de Guindos stated on Thursday that it's not the right time to discuss lowering ECB interest rates. This cautious stance is likely to discourage traders from placing bets on the Euro's strength, suggesting that the path of least resistance for the EUR/USD pair is downward.

Lagarde's Speech, US Consumer Sentiment, and USD Dynamics

Looking ahead, Eurozone economic data is expected on Friday, and all eyes are on ECB President Christine Lagarde's speech in London. In the US, the focus shifts to the release of the Michigan Consumer Sentiment Index later in the day.

EUR/USD - Technical Analysis

As the currency pair EUR/USD navigates through the forex market, it presents a complex tableau for traders and analysts alike. On the current 4-hour chart, the Euro is trading tightly against the U.S. Dollar at around 1.06687, with minimal movement in the past 24 hours, indicating a consolidation phase within the existing trend.

The technical structure shows the Euro grappling with a delicate balance as it attempts to assert direction. Key resistance levels are clearly demarcated on the chart, with an immediate ceiling at approximately $1.0700. The subsequent resistance points likely sit near $1.0750 and the more formidable $1.0847, which may test the conviction of bullish traders. On the downside, the currency pair finds its immediate support around the $1.0658 mark, followed by $1.0625 and then a more significant potential floor at $1.0519, which could serve as a bulwark against further depreciation.

Technical indicators provide further insight into the pair's momentum. The Relative Strength Index (RSI) registers at a neutral 52.68, implying a market in equilibrium without immediate overbought or oversold conditions. This balance in momentum leaves room for shifts in trader sentiment to sway the direction sharply.

The Moving Average Convergence Divergence (MACD) is not specifically quantified in the visual, but it is an essential tool for identifying the prevailing trend's strength and direction. The observation of the MACD line in relation to its signal line would ordinarily offer a clue to the momentum; a bullish crossover would suggest an upward trajectory, whereas a bearish crossover could presage a downturn.

The 50 EMA stands at $1.06644, just below the current price, providing a thin cushion that hints at a potential for short-term bullishness if the price can sustain above this level.

The chart pattern suggests an ascending channel, which traditionally signifies a bullish sentiment. However, the price action within the channel appears to be testing the lower boundary, indicating that a breakdown could lead to a trend reversal.

Conclusively, the overall trend could be described as cautiously bullish, given the ascending channel pattern and the RSI's neutral stance. The short-term forecast hinges on whether the Euro can maintain its foothold above the 50 EMA and challenge the immediate resistance levels, particularly the psychological threshold of $1.0700. Should the Euro slip below the channel support, it might then retest lower support levels, altering the immediate bullish outlook.

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