EUR/USD Current price: 1.0491
- The German IFO survey showed the sentiment deteriorated in November.
- Stock markets are on the run, reflecting a better market mood.
- EUR/USD corrected extreme oversold conditions, may soon find its next way.
The EUR/USD pair gapped higher on Monday, currently trading near an intraday high of 1.0500. The US Dollar (USD) is in retreat mode after reaching fresh yearly highs against most major rivals last week, fueled by encouraging data from the United States (US). According to S&P Global preliminary estimates, services and manufacturing output improved in November by more than anticipated. The Composite PMI rose to 55.3, the highest level in over two years. The EUR/USD pair bottomed at 1.0332 on Friday, its lowest since December 2022.
Meanwhile, US-elected President Donald Trump nominated Scott Bessent for Treasury Secretary. The news provided an impulse to stock markets at the beginning of the week, weighing on the USD, as investors read it as a measured move. Other than that, profit-taking also weighs on the American currency.
Data-wise, Germany released the November IFO survey on Business Climate. The sentiment deteriorated, as the index declined to 85.7 from 86.5 in the previous month. Expectations remained high, posting 87.2, better than the 87 expected, although below the October reading of 87.3. Finally, the assessment of the current situation declined to 84.3 from the previous 85.7.
The US session will bring the October Chicago Fed National Activity Index and the November Dallas Fed Manufacturing Business Index.
EUR/USD short-term technical outlook
From a technical point of view, EUR/USD is oversold and may correct higher in the upcoming sessions, albeit the long-term view is still bearish. In the daily chart, the pair develops well below all its moving averages, with the 20 Simple Moving Average (SMA) heading firmly south at around 1.0670, far below directionless 100 and 200 SMAs. Technical indicators, in the meantime, are posting modest bounces from their recent lows in extreme levels but lack enough momentum to support a firmer upward run.
In the near term, and according to the 4-hour chart, the EUR/USD pair seems to be at an inflection point. The pair is battling at around a bearish 20 SMA, while the longer moving averages keep heading firmly lower far above the shorter one. Finally, technical indicators have turned flat within negative levels after correcting extreme readings. The pair may extend its corrective advance if it manages to run past 1.0500, yet failure to extend gains will likely encourage sellers.
Support levels: 1.0450 1.0410 1.0375
Resistance levels: 1.0515 1.0560 1.0600
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