VOT Research Desk
Going into Thursday’s European session, the EURUSD remains weaker as sellers target critical short-term support at 1.0370.
As a result, the Euro depreciates versus the US Dollar for the first time in the previous three days.
The US Producer Price Index (PPI) for October showed higher readings, while a three-year high in US Retail Sales for the same month cast doubt on the US Federal Reserve’s (Fed) dovish stance.
Because of this, the Fed’s policymakers have recently expressed less support for talk of an easy rate hike, which puts downward pressure on the EURUSD pair.
On Wednesday, Vice President Luis de Guindos hinted at passive quantitative tightening while Pablo Hernandez de Cos, an ECB policymaker, supported more rate increases. A multi-day high in Covid levels in China also reduces risk appetite and supports the demand for the US dollar as a safe haven.
In order to sustain and balance the recovery, China’s zero-COVID strategy will need to be adjusted, according to Gita Gopinath, the first Deputy Managing Director of the International Monetary Fund (IMF), who spoke on Thursday at the Caixin Summit.
The US 10-year Treasury yields print their first daily gains in four days around 3.71%, reflecting the mood.
The S&P 500 Futures and stocks in the Asia-Pacific region have recently been trending lower, it should be noted.
EUR/USD Technical Analysis
In response to bearish warnings from the Moving Average Convergence and Divergence (MACD) indicator, sellers of the EURUSD currency pair test the 21 Simple Moving Average (SMA) supports at about 1.0370.
The Relative Strength Index’s (RSI) decline from overbought territory, which is currently at 14, is another factor supporting the Euro’s bearish bias.
However, a clean break below 1.0370 to the negative could soon push the euro down under the 50-SMA support area near 1.0210.
After that, the prior resistance level from October 4—at least 1.0185—could present a problem for the bears in the euro.
Alternatively, a two-day-old declining resistance line, at the latest near 1.0400, must provide confirmation for Euro bulls. After that, it is possible that the EURUSD will rise to its monthly high near 1.0481.
