Oct 25, 2022
VOT Research Desk
Market Insights, Considerations & Analytics
The decision by the European Central Bank and US GDP are the week’s centerpieces.
Despite worries about a recession, strong profit reports keep markets afloat.
Around 0.9860, the EUR/USD unifies its gains and displays the beginnings of bearish exhaustion.
Tuesday’s financial markets are in a waiting-and-seeing mode, with the American Dollar slightly outperforming its key competitors. As the US market opens, the EUR/USD is trading near 0.9860, aided by the weaker tone of stocks, which reflects buyers’ worries about economic expansion.
A better-than-expected German IFO Survey that revealed the business climate remained constant in October, printing at 84.3 from 84.4 the previous month, helped the EUR. The assessment of the existing situation decreased less than expected, resulting in a score of 94.1, while expectations increased to 75.6 from a revised 75.3 in September.
Be cautious before the US GDP and ECB
Investors are nevertheless wary since large corporations continue to publish earnings. More than half of the US corporations listed in the S&P 500 have so far outperformed expectations, thereby spooking the ghost of recession, according to the statistics. The initial estimate of the third quarter’s gross domestic product, which is expected to show a 2.4% yearly growth in the quarter, will be released by the United States on Thursday. Given that market investors believe the US Federal Reserve will soon begin easing the pace of quantitative tightening, the statistic will undoubtedly help stocks at the expense of the currency.
The European Central Bank will reveal its most recent monetary policy position on Thursday as well. In response to warnings that the state of the economy is worsening, the central bank is anticipated to raise rates by 75 basis points and up the pace of tightening.
This Tuesday, a few unimportant housing statistics and the October CB Consumer Confidence, which is predicted to have decreased to 105.9 from 108 in September, are on the US macroeconomic schedule.
short-term technical picture for the EUR/USD
Although close to new three-week tops, the EUR/USD pair trades in a constrained intraday range for a second straight day, exhibiting the first signs of bearish weariness. In addition, it continues to move below a long-term descending growth curve that acts as resistance near 0.9940 and originates from this year’s high of 1.1494 (recorded back in February).
The EUR/USD is developing above a somewhat bullish 20 SMA but well below firmly bearish longer ones, which is reflected in the daily chart’s modest purchasing interest. Technical indicators are now in a neutral state, with the RSI at about 52 and the Momentum moving forward around its midline.
The short-term outlook is bullish to neutral. The pair is advancing above all of its moving averages on the 4-hour chart, which are still trendless and inside a narrow 50 pip range. While still above their midlines, technical indicators lack mostly need strengthening
Levels of support: 0.9840, 9780, and 9730
Levels of resistance: 0.9895 0.9940 0.9985
