Oct 26, 2022

VOT Research Desk

Following a period of stability in the Asian session on Wednesday, the EUR/USD has gained positive momentum and has surpassed parity for the first time since September 20.

The pair may perform a technical correction prior to the next step upward, according to the near-term technical forecast, but a confirmation of parity as support is likely to keep buyers engaged.

Tuesday’s statistics from the US showed that consumer confidence dipped in October and home values fell at a faster rate than anticipated in August.

Investors appear to be searching for a reason to exit dollar long positions in anticipation of a less aggressive Fed policy tightening after November, despite the fact that these data seldom impact the market.

Markets are presently pricing in a more than 50% possibility of a total of 125 basis points at the upcoming two policy meetings, as opposed to barely 20% only last week, according to the CME Group FedWatch Tool.

The US Dollar Index (DXY), which reflects the detrimental effect on the dollar’s value, is already down 1.5% this week.

Data on new home sales and the goods trade balance will be presented in the US economic docket throughout the second half of the day. Markets anticipated that after an amazing growth of 28.8% in August, home sales would decline by 13.9% in September.

The dollar is expected to keep losing ground versus its main competitors in the event that house sales experience a significant downward correction in September. It’s also important to remember that US stock index futures trade in the red.

The dollar may benefit from flows into safe-haven assets and restrict the upward potential of EUR/USD if Wall Street’s major indexes fail to build on Tuesday’s gains and suffer significant losses after the opening bell.

EUR/USD Technical Analysis  

On the four-hour chart, the Relative Strength Index (RSI) indicator increased over 70, signaling short-term overbought circumstances.

The positive bias is expected to remain intact even if EUR/USD staged a technical pullback as long as the pair is able to maintain above parity.

On the upside, 1.0100 (psychological level), 1.0130, and 1.0050 (static level) all line up as the first technical resistance (static  level).

Supports are positioned at 0.9950 (static level), 0.9900 (static level), and 1.0000 (static level, psychological level) (psychological level).

Oct 25, 2022

VOT Research Desk

Bulls on the EUR/USD had trouble maintaining control after a four-day upswing printed at the fortnightly peak near 0.9900. The important currency pair uses this to trace the slow markets leading up to Tuesday’s European session.

However, it should be highlighted that the purchasers were able to maintain control due to the US dollar’s weakness, softened rates, and lack of Fed speak.

A cautious optimism in the Asian session brought on by advances from China and Japan may also work in favor of the upward trend.

Additionally, the EUR/USD rising momentum appears to be supported by rumors that the European Central Bank (ECB) is open to reversing Quantitative Tightening (QT), the bond operations taken to address problems caused by the credit crisis.

Amid worries about slowing the rate rise, the Fed’s officials’ most recent remarks haven’t been particularly spectacular, which has allowed the US dollar to drop from its multi-year high.

In spite of this, the US Dollar Index (DXY) continues to struggle at 111.85, making intraday lows and failing to build on week-start gains due to negative Treasury bond yields and cautious market optimism.

The 10-year Treasury rates in the US are still under pressure at 4.21%, down two basis points (bps), while US stock futures and equities in the Asia-Pacific region are rising. Moving on, the second-tier US housing statistics and consumer confidence will follow Germany’s IFO mood figures for October to determine short-term EUR/USD movements.

The pair is less likely to make significant swings, unless unexpected events occur, although buyers may maintain control because Fed hawks are disrupting the pre-meeting silent period.

On Monday, concerns about escalating tension in the West-Russian relations and dismal October activity data from the US, UK, Europe, as well as Germany, boosted the pair bears.

EUR/USD Technical Analysis Report

Beyond the one-month-old trend line support, at the latest at 0.9700, a drop in the EUR/USD price remains elusive.

Before the bulls assault the monthly peak near the parity level, a downward-sloping resistance line from early June around 0.9900 seems to be their main obstacle.

Oct 05, 2022

VOT Research Desk

Analytical Viewpoint EUR/USD

After encountering new supply just below the parity threshold, EUR/USD is now moving south near 0.9950. The primary currency pair’s continued decline is being aided by the wider US dollar recovery.

As prospects of rapid Fed tightening return following the Reserve Bank of New Zealand’s (RBNZ) hawkish 50 basis point rate rises, the dollar is finding new buyers and mounting a respectable comeback. Hopes for a stop or delay in the Fed’s aggressive rate rise plans were dashed by the RBNZ action. The US Treasury rates have recovered throughout the time curve thanks in part to this story.

Investors are now anticipating the US ADP employment and ISM Services PMI data for fresh cues on the magnitude of the Fed rate rise in November, which has caused the risk tone to become slightly cautious. The dollar was destroyed on Tuesday as a result of a steep decline in US job postings that cooled excessive expectations of a Fed rate rise.

Even though the EU energy head indicated late Tuesday that “we have adequate storage to navigate through winter without Russian gas in scenario of mild weather,” investors in EUR remain uneasy due to the impending European energy crisis.

In the meanwhile, the EU approved fresh penalties, including the restriction on oil prices, which will be made public on Wednesday.

Technical Viewpoint EUR/USD

The continuation of a falling wedge breakthrough achieved on Monday failed just below the mildly bearish 50-Daily Moving Average (DMA) at 1.0016 when looking at EUR/USD.

Should the slide continue, sellers thus focus on the horizontal 21 DMA at 0.9896. The psychological threshold of 0.9950 might help purchasers before that. Although it has gone flat, the 14-day Relative Strength Index (RSI) remains above the 50.00 mark, giving bulls reason for optimism.

To continue the advance toward the 1.0050 high set on September 20, a daily close above the 50 DMA level is required.

On the strength of the ongoing bullish trend, bulls will test the 1.1100 round mark further upward.