Market Considerations and Analytics
Key Notes
- Further upward may be elusive as the EUR/USD prints its highest daily candle closure as of June.
- US Dollar Index Records 2nd Day of Losing Consecutively.
- High US PPI and data from the University of Michigan may support the dollar.
FUNDAMENTAL BACKDROP FOR EUR/USD
Early European trade has seen the EUR/USD maintain its upward trend as significant US data events are coming up. With two days of losses followed by two days of rises before today’s US data next week and the Central Bank meets, the EUR/USD has had a rather inconsistent week.
Thursday, the dollar index continued to fall, supporting the Euro bulls and enabling EUR/USD to post its best daily finish since June 24. The dollar tends to be weaker in December, and despite yesterday’s minor uptick in sentiment, safe desire has decreased.
This week, some ECB members made statements regarding the potential for additional rate increases. The markets are now factoring in a 55 bps increase at the ECB meeting next week. A 75 bps increase for December was not ruled out by ECB policymaker Gabriel Makhlouf, who also said that a 50 bps increase is likely to be followed by more.
A recession cannot be ruled out, according to remarks made by ECB policymaker Francois Villeroy this morning, although they had little effect on the euro. Inflation predictions over the next 12 months, according to data from a consumer poll provided by the ECB thursday, are estimated to be 5.4%.
Late in day when, as we await the US PPI and University of Michigan statistics, focus shifts to the US economic schedule. A significant data print could provide some dollar support, while a weaker one could raise the EUR/USD rate over the 1.06000 handle.
Technically speaking, the EUR/USD pair is still striving to break above the 1.06000 level for the 2nd attempt this week while printing higher highs and lower lows on the daily timeframe. Buyers may be excessively confident in their positions ahead of the US data later today because of the significant data events coming up the week after, which might cause EUR/USD to decline before the announcement.
If the price were to rise over 1,06000, on the other hand, selling pressure could resume, sending the pair back down, with 1.0550 acting as immediate support. If the weekly candle closes below 1.05300, the weekly timescale will print a doji candlestick closure, and the pair might come under fresh selling pressure early in the following week.
Source: TradingView
With 62% of traders presently maintaining short positions, retail traders are Selling the EUR/USD. Client mood is frequently considered to be a buying opportunity, thus the fact that traders are SHORT signals that the price of the EUR/USD may continue rising.
