EUR/USD experienced further downward pressure on Tuesday, losing a third of a percent and briefly testing below 1.0600. The pair has been on a downward trend for the past seven weeks after reaching multi-month highs in September. Greenback flows have dominated the Fiber chart due to a lack of significant EU-centric economic data, but Euro traders are looking ahead to Thursday’s pan-EU Gross Domestic Product (GDP) update, which is expected to confirm a 0.4% QoQ growth in the third quarter.
With US CPI inflation figures for October set to release on Wednesday, the market anticipates a rebound in annualized headline consumer price growth. Full-fat CPI is forecasted to rise to 2.6% YoY from September’s 2.4%, while core CPI is expected to remain steady at 3.3% YoY. Monthly inflation figures are likely to hold flat for both categories. The bearish trend in EUR/USD is evident on the daily chart, with the pair trading below the 50-day and 200-day EMAs, both of which are now acting as resistance levels. The MACD indicator also shows strong downward momentum, suggesting that sellers are in control and the bearish trend is likely to continue.
In terms of support levels, the psychological level of 1.0600 may provide some relief for EUR/USD, but a break below could lead to a target of 1.0500. A bullish reversal would require a break back above the 200-day EMA, but given the current technical setup, a recovery seems unlikely in the near term. The Euro is the currency for the 19 EU countries in the Eurozone and is the second most traded currency in the world after the US Dollar. The European Central Bank (ECB) in Frankfurt, Germany, sets interest rates and manages monetary policy to maintain price stability.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is a crucial economic indicator for the Euro. If inflation surpasses expectations, the ECB may raise interest rates to control it, benefiting the Euro. Data releases such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can impact the Euro’s direction, especially for the four largest economies in the Eurozone. Another essential indicator for the Euro is the Trade Balance, measuring the difference between exports and imports, affecting the currency’s strength based on demand for exports.
