- EUR/USD falls back from 20-DEMA as the risk-aversion theme strengthens.
- The US Dollar appeal improves due to some increment in the odds of one more interest rate increase from the Fed.
- The ECB is expected to maintain interest rates steady at 4.5% to avoid a slowdown.
The EUR/USD pair retreats after a short-lived pullback move to near the 1.0550 in the European session. The major currency pair faced an intense sell-off as the appeal for the US Dollar improved amid deepening Middle East tensions and some increment in expectations of one more interest rate increase from the Federal Reserve (Fed) by the year-end.
The US Dollar Index (DXY) recovered strongly to near 106.60 and is expected to extend further as the United States is resilient unlike other economies, which are struggling to absorb the consequences of higher interest rates by the central bankers.
Meanwhile, the European Central Bank (ECB) is expected to keep interest rates unchanged in November as the Eurozone economy is facing the issues of poor economic prospects. To safeguard the shared continent from a slowdown, the ECB is expected to maintain interest rates steady at 4.5%.
EUR/USD drops vertically after a less-confident pullback to near the 20-day Exponential Moving Average (EMA) to near 1.0600. The shared currency pair trades near the horizontal support of the Broadening Triangle chart pattern, which is plotted from November 14 high at 1.0482. The upward-sloping trendline of the aforementioned chart pattern is placed from February 2 high at 1.1033.
The Relative Strength Index (RSI) (14) struggles to climb into the 40.00-60.00. A failure in the same would indicate that the downside momentum has been firmer.
A fresh downside would be seen if the asset drops below October 3 low at 1.0448. This would expose the asset to a fresh 10-month low around 1.0400. A slippage below the latter would make way for 11 November 2022 high at 1.3642.
On the flip side, a recovery move above October 12 high at 1.0640 would drive the asset toward September 6 low around 1.0700, followed by September 20 high at 1.0737.
EUR/USD daily chart
-638327979603469465.png)
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
EUR/USD recovers from two-year lows, stays below 1.0450
EUR/USD recovers modestly and trades above 1.0400 after setting a two-year low below 1.0350 following the disappointing PMI data from Germany and the Eurozone on Friday. Market focus shifts to November PMI data releases from the US.
GBP/USD falls to six-month lows below 1.2550, eyes on US PMI
GBP/USD extends its losses for the third successive session and trades at a fresh fix-month low below 1.2550 on Friday. Disappointing PMI data from the UK weigh on Pound Sterling as investors await US PMI data releases.
Gold price refreshes two-week high, looks to build on momentum beyond $2,700 mark
Gold price hits a fresh two-week top during the first half of the European session on Friday, with bulls now looking to build on the momentum further beyond the $2,700 mark. This marks the fifth successive day of a positive move and is fueled by the global flight to safety amid persistent geopolitical tensions stemming from the intensifying Russia-Ukraine war.
S&P Global PMIs set to signal US economy continued to expand in November
The S&P Global preliminary PMIs for November are likely to show little variation from the October final readings. Markets are undecided on whether the Federal Reserve will lower the policy rate again in December.
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.