EUR/USD has sustained its position below the EMA-200 line, indicating a potential shift into a more defined downtrend. Recent comments from Raphael Bostic, head of the Atlanta Federal Reserve, have influenced this movement. Bostic suggests a modest 25-basis-point cut in interest rates this year – contrary to earlier predictions of a more aggressive 50-point reduction. Federal Reserve officials have underscored that any policy easing would be contingent on upcoming economic data.
The dollar's strength is further bolstered by the Empire Manufacturing Index for New York State, which sharply declined to -11.9 in October, a significant drop from 11.5 in September, marking the lowest level since May. This unexpected downturn, which contrasts with analyst expectations for a slight positive reading of 3.8, highlights a deterioration in regional manufacturing activity. While this data suggests potential headwinds for the US economy, it could paradoxically support the USD if it fuels speculation about a less aggressive rate-cutting strategy by the Fed.
Market participants eagerly anticipate further economic reports, including data on retail sales, industrial production, and the upcoming manufacturing data from FRB Philadelphia. These indicators will be crucial in painting a more comprehensive picture of the US consumer sector and overall industrial conditions, potentially guiding the next moves for EUR/USD.
Technical analysis of EUR/USD
EUR/USD is entrenched downward, aiming for the 1.0777 target level. The currency pair is currently consolidating around 1.0888. A break below this consolidation to 1.0860 could further propel the pair towards 1.0777. Upon reaching this level, a corrective phase towards 1.0996 might be anticipated. The MACD indicator, positioned below zero and poised to reach new lows, supports this bearish outlook.
On the hourly chart, EUR/USD has formed a consolidation range just above 1.0888. A downward break from this range is expected, which could extend the decline towards 1.0857 and potentially continue the downtrend to 1.0777. This scenario is reinforced by the Stochastic oscillator, whose signal line is below 50 and trending downwards towards 20, indicating the likelihood of continued bearish momentum.
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