Oct 10, 2022
VOT Research Desk

Key News – Insights and Analysis

• Major Ukrainian cities were struck by Russian missile strikes.
• There isn’t much economic data to support the faltering Euro.

Russian officials claim that during the most recent round of attacks, 75 missiles were fired towards important Ukrainian cities. General Valerii Zaluzhnyi told the BBC that out of the 75 missiles fired, 41 were neutralised and the remaining missiles impacted cities including Kyiv, Dnipro, and Kharkiv with infrastructure targets. With Russia’s newest escalation of hostilities, investors are once more flocking to the US dollar as a safe haven, sending the greenback back up to its most recent 2- decade high.

The prognosis for the single currency will probably be influenced by US data releases over the next few days since the Euro Area is not expected to disclose many significant economic data points this week. Later in the week, with the major release of the September inflation figures on Thursday, the major US economic reports begin.

Daily Economic Activity Schedule

Parity was anticipated to act as barrier, as we noted last week, and this is still the case. The US dollar is still strongly supported while the Euro appears to be headed in only one direction lower, therefore as a pair, EUR/USD is declining on the best of both worlds scenarios.

The significant reversal last week when the pair reached parity is seen on the daily EUR/USD chart. This level will become stronger and more difficult to break down the more it is challenged and holds. The two-decade low of 0.9536 is currently the initial goal for the EUR/USD. A print below this level would result in a new lower low, another warning flag, while the string of lower highs is still standing. Any rise higher is likely to be brief and soon retraced because there are currently few fundamental or technical reasons to buy EUR/USD.

According to data from retail traders, 59.08% of traders are net long, with the long-to-short ratio standing at 1.44 to 1. Traders who are net-long are up 0.18% from yesterday and up 4.91% from the previous week, while those who are net-short are up 6.73% from yesterday and up 7.54% from the previous week.

The fact that traders are net-long signals that the price of the EUR/USD may continue to decline. We normally take a contrarian stance against the attitude of the crowd. However, traders are less net-long today than they were yesterday and last week. Despite the fact that traders are still net-long, recent shifts in mood indicate that the current EUR/USD price trend may shortly reverse higher.