Oct 21, 2022

VOT Research Desk

The EUR/USD pair extends its late decline from the area of the mid-0.9800s from the previous day and encounters new supply on Friday.

Through the early European session, spot prices remained in a defensive position, and the decline was prompted by the resurgence of fresh purchasing near the US dollar.

Patrick Harker, the president of the Philadelphia Federal Reserve, said on Thursday that the US central bank is actively working to slow the economy in order to battle inflation.

His remarks gave the recent rise in US Treasury bond rates more gasoline and they caused the rate on the standard US government bond to raise to its highest levels since the 2008 financial crisis.

In addition, the general sense of caution brought on by rising recession worries provides support for the safe-haven dollar.

Technically speaking, the EUR/USD pair doesn’t appear to have altered all that much and the daily chart’s symmetrical triangle formation also suggests a neutral bias.

This makes it wise to hold off on setting up for the short-term trajectory until there has been a consistent move in either way.

Any further decline however is more likely to find solid support close to the level of 0.9700, which corresponds to the base of the symmetrical triangle.

A strong break below might push the EUR/USD pair back toward the swing low from last week, which was in the neighborhood of 0.9630.

The 0.9600 level is next, which if breached would expose spot prices to a risk of hitting the 0.9535 area struck last month’s two-decade low.

On the other hand, a fresh supply might continue to meet bullish momentum back above the 0.9800 level close to the symmetrical triangle resistance, which is now in the mid-0.9800s.

The EUR/USD pair should be able to retake the round number, 0.9900, with some follow-through purchasing.

The latter crosses the 50-day SMA and, if strongly cleared, might lead to a rise for short-covering.

However, the gain is probably going to be limited close to the parity level, which might continue to serve as a turning point for medium-term traders.

Oct 20, 2022

VOT Research Desk

The mid-0.9700s or a three-day low hit earlier on this Thursday draw some buyers to the EUR/USD pair, which partially reverses the previous day’s steep losses.

Through the early European session, the pair trades with minor gains and finds support from a little decline in the US dollar.

 The news that China is thinking about reducing the 10-day quarantine period for incoming travellers to 7 days offers a much-needed reprieve. As a result, the risk attitude recovered over the day, which in turn caused some selling of the safe-haven greenback.

Technically speaking, the overnight decline reinforces a resistance represented by the top of a symmetrical triangle, which on the daily chart has the shape of a bearish pennant.

The aforementioned barrier, which is now in the range of 0.9865 to 0.9886, should now serve as a turning point and aid in determining the following leg of a directional move for the EUR/USD pair.

The 50-day SMA, located in the 0.9920–0.9925 region, may be reached by spot prices if a persistent strength is seen to be present above the 0.9900 mar. A little follow-through purchasing will cancel out the bearish setup and open the door to more gains.

On the other hand, the bottom of the Asian session, at 0.9755, may serve as immediate support before the 0.9730-0.9725 range and the 0.9700 level. The latter is close to the support of the symmetrical triangle, which, if decisively broken, will indicate a short-term bearish bias.

The EUR/USD pair may then pick up speed as it descends into the 0.9630 area before reaching the 0.9600 level.

Spot prices may eventually fall to levels near the 0.9535 zone seen in September, which would test a two-decade low.