EURUSD: 1.08 pending testing
One of the most important events during the previous week was a FOMC meeting held on November 1st. As it has been expected, the Fed did not raise further interest rates, but Fed Chair Powell noted in an after-the-meeting address to the public, that it does not mean that rates will not be raised in the future period. He again stressed targeted 2% inflation, and in case that inflation remains persistent toward the upside, the Fed will react with further increases. On the other hand, the market perceived the latest Fed move as the end of further rate increases. In addition, Friday`s posted jobs figures supported that optimism. The US non-farm payrolls were increased by 150K, much lower from the market estimate of 180K. Unemployment rate was increased to the level of 3.9%, again beating the market estimate of 3.8%. Although the Fed`s pivoting point is still not on a schedule, there was enough information for investors to regain optimism. While the equity market and Treasuries were gaining, the USD was losing in strength.
Other data published for the US showed CB Consumer Confidence in October reaching 102.6 from forecasted 100. ISM Manufacturing PMI for October was standing at a lower level from expected at 46.7.
Published data for EuroZone are showing GDP growth in Germany at level of -0.3% for Q3, which was better from market estimate of -0.7%. Preliminary inflation rate for Germany in October was 3.8%, lower from market anticipation of 4% on a yearly basis. At the same time, core inflation in the Euro Area slowed in October to 4.2% in October, from 4.5% posted previously, while yearly inflation rate dropped further to the level of 2.9%, beating market estimate at 3.1%. The GDP growth rate for Q3 was standing at -0.1% on a quarterly basis, and lower from forecasted 0%. The GDP growth on a yearly basis was 0.1% in Q3, again lower from 0.2% expected by the market. Unemployment rate in Germany remained unchanged in October at a level of 5.8%.
The currency pair started the previous week by testing the 1.055 support line. During the week, buying orders were prevalent on the market, and during Friday`s trading session, the pair reached its highest weekly level at 1.074. Resistance line at 1.067 has been easily crossed, but the next resistance line at 1.08 has not been tested on this occasion. This leaves some space for the market to test it in the week ahead. The RSI reached level of 62 and is clearly on the path toward the overbought side of the market in the coming period. Moving average of 50 days continues with its divergence from MA200, without indications on potential cross in the coming period.
Considering that several indicators are pointing toward potential for further weakening of the USD, there is an increased probability that the resistance line at 1.08 will be tested in the week ahead. There is currently no indication that this line could be breached, especially taking into consideration that there are no significant indicators scheduled to be released during the week ahead. On the opposite side, the support line at 1.067 could be tested for one more time.
Important news to watch during the week ahead are:
Euro: Germany Inflation Rate Final for October, ECB President Lagarde speech,
USD: Fed Chair Powell Speech, Michigan Consumer Sentiment preliminary for November.
Other data published for the US showed CB Consumer Confidence in October reaching 102.6 from forecasted 100. ISM Manufacturing PMI for October was standing at a lower level from expected at 46.7.
Published data for EuroZone are showing GDP growth in Germany at level of -0.3% for Q3, which was better from market estimate of -0.7%. Preliminary inflation rate for Germany in October was 3.8%, lower from market anticipation of 4% on a yearly basis. At the same time, core inflation in the Euro Area slowed in October to 4.2% in October, from 4.5% posted previously, while yearly inflation rate dropped further to the level of 2.9%, beating market estimate at 3.1%. The GDP growth rate for Q3 was standing at -0.1% on a quarterly basis, and lower from forecasted 0%. The GDP growth on a yearly basis was 0.1% in Q3, again lower from 0.2% expected by the market. Unemployment rate in Germany remained unchanged in October at a level of 5.8%.
The currency pair started the previous week by testing the 1.055 support line. During the week, buying orders were prevalent on the market, and during Friday`s trading session, the pair reached its highest weekly level at 1.074. Resistance line at 1.067 has been easily crossed, but the next resistance line at 1.08 has not been tested on this occasion. This leaves some space for the market to test it in the week ahead. The RSI reached level of 62 and is clearly on the path toward the overbought side of the market in the coming period. Moving average of 50 days continues with its divergence from MA200, without indications on potential cross in the coming period.
Considering that several indicators are pointing toward potential for further weakening of the USD, there is an increased probability that the resistance line at 1.08 will be tested in the week ahead. There is currently no indication that this line could be breached, especially taking into consideration that there are no significant indicators scheduled to be released during the week ahead. On the opposite side, the support line at 1.067 could be tested for one more time.
Important news to watch during the week ahead are:
Euro: Germany Inflation Rate Final for October, ECB President Lagarde speech,
USD: Fed Chair Powell Speech, Michigan Consumer Sentiment preliminary for November.
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