EUR/USD Current price: 1.0845
- The European Central Bank trimmed interest rates by 25 bps as expected.
- Upbeat United States data pushed the US Dollar into fresh weekly highs.
- EUR/USD is oversold in the near term, but there are no signs of downward exhaustion.
The EUR/USD pair remained under pressure throughout the first part of Thursday, bottoming at 1.0848 ahead of the European Central Bank (ECB) monetary policy decision and United States (US) macroeconomic data. Additionally, market players started looking at the US Presidential run, as polls show a very tight result three weeks ahead of the election.
The ECB decided to lower the benchmark interest rate, the so-called Rate on Deposit Facility, by 25 basis points (bps) from 3.5% to 3.25%. In fact, the three key ECB interest rates were lowered by 25 bps. The accompanying statement noted that “the disinflationary process is well on track,” albeit adding that “domestic inflation remains high, as wages are still rising at an elevated pace.”
The announcement had a limited impact on EUR/USD, with the pair seesawing within a 15 pips’ range. Anyway, the pair dipped to fresh multi-week lows following the release of upbeat US data. The country published September Retail Sales, which rose by 0.4% in the month, while the Philadelphia Fed Manufacturing Survey jumped to 10.3 in October from 1.7 in September. Finally, Initial Jobless Claims for the week ended October 11 rose by 241K, below the 260K anticipated.
As ECB President Christine Lagarde starts the press conference, the EUR/USD pair keeps approaching the 1.0800 mark.
EUR/USD short-term technical outlook
From a technical perspective, the EUR/USD pair is poised to extend its slump. The daily chart shows it continues to post lower lows and lower highs and that it is currently developing below all its moving averages. The 20 Simple Moving Average (SMA) keeps gaining downward traction, although well above directionless 100 and 200 SMAs. Technical indicators, in the meantime, maintain their firmly bearish slopes, reaching oversold readings yet without signs of downward exhaustion.
In the near term, and according to the 4-hour chart, the risk also skews to the downside. A bearish 20 SMA keeps providing intraday resistance, currently at around 1.0885, while the longer ones accelerate south above the shorter one. At the same time, the Momentum indicator hovers directionless within negative levels, while the Relative Strength Index (RSI) indicator heads south at around 26, still favoring another leg south despite oversold conditions.
Support levels: 1.0805 1.0770 1.0735
Resistance levels: 1.0885 1.0920 1.0960
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD clings to recovery gains below 0.6550 on weaker USD, upbeat mood
AUD/USD holds sizeable gains below 0.6550 in the Asian session on Monday. A sharp pullback in the US bond yields prompts some US Dollar profit-taking after US President-elect Trump named Scott Bessent as Treasury Chief. Moreover, the upbeat market mood supports the risk-sensitive Aussie.
USD/JPY trims losses to regain 154.00 as USD sellers pause
USD/JPY trims losses to retest 154.00 in the Asian session on Monday. Retreating US Treasury bond yields drags the US Dollar away from a two-year top high and drives flows towards the lower-yielding Japanese Yen, though the BoJ uncertainty could limit losses for the pair.
Gold: Is the tide turning in favor of XAU/USD sellers?
After witnessing intense volatility in Monday's opening hour, Gold's price is licking its wounds near $2,700. The bright metal enjoyed good two-way trades before sellers returned to the game after five straight days.
Elections, inflation, and the bond market
The Federal Reserve believes inflation is no longer a concern for consumers and the time has come to ensure the rate of change of prices does not decline any further.
Read more
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.