EUR/USD Price Analysis – Nov 15, 2023

Daily Price Outlook

The EUR/USD currency pair failed to extend its three-day winning streak and edged lower on the day. However, the reason for its downward trend can be attributed to the modest USD uptick, which was seen as a key factor that has been exerting pressure on EUR/USD pair. In the meantime, the downside in the EUR/USD pair could be limited amid bets that the Fed is done raising rates. This expectation could limit the potential gains for the USD and provide support for the EUR/USD pair.

Impact of Weaker USD and Fed Rate Expectations on EUR/USD Pair

The broad-based US dollar recently witnessed a modest rebound, recovering from a one-week low and causing some challenges for the EUR/USD pair. Yet, the dollar's rise wasn't too strong, mainly because most people think the Federal Reserve is done raising interest rates. This sentiment solidified with the release of softer US consumer inflation figures for October, revealing a stable headline CPI and a decrease in the yearly rate from 3.7% to 3.2%, the smallest rise in two years.

Investors adjusted their expectations, now anticipating the Fed to maintain interest rates. Market pricing even suggests the potential for rate cuts starting in May 2024. This adjustment prompted a significant drop in US Treasury bond yields, potentially limiting aggressive bullish bets on the USD and helping to mitigate downward pressure on the EUR/USD pair.

Thus, the softer US dollar and expectations of the Fed maintaining rates led to a drop in Treasury yields, easing aggressive bullish bets on the USD and alleviating downward pressure on the EUR/USD pair.

Upcoming US Economic Indicators and Market Dynamics for EUR/USD Pair

Looking forward, the upcoming releases including the Producer Price Index (PPI), monthly Retail Sales figures, and the Empire State Manufacturing Index will be in the spotlight These, coupled with US bond yields and overall market sentiment, will likely influence demand for the safe-haven US dollar and add new momentum to the EUR/USD pair.

EUR/USD - Technical Analysis

As of November 15th, the EUR/USD pair has showcased a slight uptick, inching up by 0.04% to 1.08825. This movement has been contained within a defined spectrum of activity as the pair navigates through pivotal price levels. With the current pivot point at $1.0866, EUR/USD faces immediate resistance at $1.0939. A break beyond could see the pair test the psychologically significant $1.1000 level, followed by potential resistance at $1.1063. Should the momentum wane, immediate support is anticipated at $1.0802, with further safety nets at $1.0729 and $1.0662.

Technical indicators provide a deeper insight into the market sentiment. The Relative Strength Index (RSI) is notably high at 81, signaling that the pair might be entering overbought territory, which could precede a price correction. Meanwhile, the MACD's current value suggests that the market is leaning toward bullishness, with potential for continued upward momentum. The currency's trade above the 50-day EMA at $1.0709 corroborates the short-term bullish trend, adding to the positive technical outlook.

The observed chart patterns, including an upward trendline breakout at $1.0800 and a bullish engulfing candle, further bolster the case for a strong uptrend. These patterns suggest that buyers are gaining traction, potentially leading to further gains.

In conclusion, the overall trend for EUR/USD is bullish above $1.0849, and the pair is expected to challenge higher resistance levels in the near term.

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