Nov 7 – Analysis
VOT Research Report
Analytics and Considerations
Prevailing EURUSD rate: 0.9978
- In the week, the US will release its October Consumer Price Index.
- The dollar is under pressure due to speculation that the Fed would decrease the rate of tightening.
- Although it is unable to get over parity, the EURUSD is only modestly bullish in the near term.
The dollar trades with a soft tone due to an uptick in market sentiment, and the EURUSD is trading not far below an intraday high of 1.0006. A generally positive US Nonfarm Payrolls report on Friday increased demand for high-yielding instruments, which hurt the value of the dollar.
The American dollar gained at the weekly beginning as mediocre Chinese data dampened sentiment, but it soon started to fall. The market’s mood is being supported by a number of factors, one of which is fresh speculation that the US Federal Reserve is about to change course on monetary policy. Despite the aggressive comments made by Chair Jerome Powell, the central bank is anticipated to slow the pace of quantitative tightening. China is a further element. Investors are once more factoring in loosening restrictions despite the rise of new coronavirus infections.
Before Wall Street opens, stock markets are rising, and US futures are expanding their Friday advances. US Treasury yields are constant in the meantime, moving slightly lower to reflect lessening fears.
The US Consumer Price Index, which is expected for next Thursday, is the only significant event on the macroeconomic calendar. While the core figure is anticipated to be 6.5%, annual inflation is anticipated to have slowed in October to 8% from 8.2% in September. Germany, meantime, shocked with a positive reading when it reported September Industrial Production, which increased by 0.6% MoM rather than the 0.8% decline anticipated.
Near-term technical forecast for EUR/USD
The EURUSD pair is currently trading around 0.9980, and the daily chart’s technical indicators point toward an upward extension despite the lack of strong higher impetus. The pair continues to rise over the 20 SMA, which is only slightly bullish, while the 100 SMA, which acts as dynamic resistance at about 1.0050, is only somewhat bearish above the current level. Technical indicators, on the other hand, remain rudderless within positive ranges, indicating little enthusiasm in the pair.
The technical picture is very similar in the short term and per the 4-hour chart. Technical indicators are still in the green, but impetus is waning and the RSI is consolidating around oversold levels. Despite this, the EURUSD develops above all of its moving averages, with the 20 SMA picking up momentum and turning bullish, indicating short-term purchasing activity.
