Euro looks to be moderately offered.
The Euro (EUR) continues to its early-week weakness versus the US Dollar (USD). Resulting in a drop in EURUSD to the 1.0550 zone on Tuesday.
In contrast, the USD Index (DXY) tracks the Greenback as it bounces off earlier lows at 105.90. Despite continued geopolitical uncertainty in the Middle East. And a concomitant increase in risk aversion.
Regarding In terms of monetary policy, investors believe the Federal Reserve (Fed) will keep interest rates at their current levels. For the rest of the year. Simultaneously. Market speculation persists about the European Central Bank (ECB) pausing its interest-rate hike cycle. Despite inflation levels exceeding the bank’s target and mounting concerns about the possibility of a future recession or stagflation in the European region.
Christine Lagarde, President of the European Central Bank, will speak at the IMF/World Bank meetings.
Furthermore In the United States, the NFIB Business Optimism Index, Wholesale Inventories, and comments by Atlanta Fed President Raphael Bostic (2024 voter, hawk), FOMC Governor Christopher Waller (permanent voter, hawk), and Minneapolis Fed Neel Kashkari (voter, centrist) are all due.
Daily Market movers: The euro is on the defensive in a risk-off environment.
The EUR continues to fall versus the USD.
US and German yields try a sluggish recovery.
Investors expect the Fed will delay raising interest rates in the coming months.
Markets expect the ECB to cease its rate hike campaign.
The risk-off trade benefits from escalating fears in the Middle East.
The possibility of a USDJPY intervention is still being discussed
Technical Outlook
The Euro’s upside appears to be capped around 1.0600 EURUSD adds to the pessimism exhibited at the start of the week, revisiting the 1.0550 zone on Tuesday.
The continuing of selling pressure on the EURUSD might result in a revisit of the 2023 low of 1.0448 set on October 3 and perhaps a test of the crucial psychological level of 1.0448. 1.0400. This level is violated. A retest of the lows of 1.0290 (November 30, 2022) and 1.0222 (November 21, 2022) is possible.
Moreover If the pair develops an upward impetus, the next objective might be the 1.0617 from September 29. Followed by the crucial 200-day Simple Moving Average (SMA) at 1.0823. If the latter is breached, the pair may challenge the August 30 high at 1.0945 and approach the psychological barrier of 1.1000. Further advances over the August 10 peak of 1.1064 may take the pair to the July 27 high of 1.1149. And ultimately to the July 18 peak of 1.1275.
On the other hand as long as the EURUSD remains below the 200-day simple moving average. There is a chance of further downward pressure.
