Euro is flirting with the 55-day simple moving average (SMA) against the US Dollar.

The Euro (EUR) maintains its optimism versus the US Dollar (USD) in the first half of the week. Bringing EURUSD to new five-day highs above 1.0675 on Tuesday, an area that also coincides with the temporary 55-day SMA.

On the other hand, the Greenback faces additional downside pressure. Forcing the USD Index (DXY) to breach the critical support level of 106.00. Amid a broad-based improvement in risk appetite. The ongoing decline The weakening of the US dollar is mirrored by a weakening of US rates across the curve.

In terms of monetary policy, market players are increasingly certain. That the Federal Reserve (Fed) will continue its present stance of keeping interest rates unchanged at Wednesday’s meeting. Nonetheless, there remains a chance of a rate hike in December. Which looks to be backed by the US economy’s ongoing resilience and still-high inflation levels.

The CPI in the Eurozone fell further in October, according to the Eurozone flash inflation rate.

In the domestic calendar, Retail Sales in Germany fell 4.3% year on year in September. In the broader Eurozone, the advanced Inflation Rate for October saw the CPI rise 2.9% YoY. While the flash Q3 GDP Growth Rate expects the economy to drop 0.1% QoQ. And grow by 0.1% year on year.

The US Employment Cost survey is due, followed by the FHFA House Price Index. And The Conference Board’s main Consumer Confidence survey.

Daily market movers: The euro looks to consolidate the 1.0600 breakout.

The EUR is gaining ground against the USD.

US and German yields are set to fall further.

The Fed might yet raise interest rates by 25 basis points in December.

The ECB’s monetary policy standoff is likely to last until the second half of 2024.

Geopolitical tensions in the Middle East remain high.

Earlier on Tuesday, the Bank of Japan revised its YCC program.

In October, Chinese PMIs surprised to the downside.