EUR: After the PMIs, EUR/USD is under strain around 0.9900.

VOT Research Desk

Oct 24,2022

Market Insights, Considerations & Analytics

Just before 0.9900, the upward impetus of the EUR/USD falters.

At the start of the week, the dollar makes a modest rebound effort.

Flash PMIs for manufacturing and services are highlighted.

On Monday, the euro experiences some slight negative pressure, pushing the

EUR/USD pair down to the 0.9820 area.

EUR/USD assesses tolerance for risk and PMIs

After two straight days of gains, the EUR/USD is currently under price pressure and gives up some ground due to the dollar’s modest recovery and the decline in US rates.

The German 10-year bund yields, which are still present on the debt markets, are approaching the 2.30% range and have fallen to 3-day low points after peaking at 2.53% at the conclusion of last week.

Before the ECB event on Thursday, when market players mainly expect a 75 bps rate increase by the central bank, the pair is anticipated to continue consolidating.

For the current month, the flash Manufacturing PMI is anticipated to fall to 47.4 in France, 45.7 in Germany, and 46.6 in the larger Euroland, according to the domestic calendar.

The Chicago Fed National Activity Index and advanced PMIs are both due in the US.

Observations regarding EUR

Although it has so far done well to retain the trade above the level of 0.9800 for the foreseeable being, EUR/USD now faces some corrective decrease.

It is anticipated that the euro’s price action would closely follow dollar trends, geopolitical unrest, and the Fed-ECB split in the period. Given the ongoing strength of the US economy, the latter is projected to keep expanding in light of recent findings from significant economic indicators.

The mounting concerns about a geographical recession, which seem to be confirmed by falling sentiment indicators and an expected decline in some fundamentals, also add to the euro’s gloomy sentiment.

Major occurrences in the euro zone this week: Advanced Manufacturing/Services PMIs for Germany and the EMU (Monday) – Germany Tuesday’s IFO Business Climate: France Wednesday’s consumer confidence data for Germany Italian GfK Consumer Confidence Consumer Confidence, ECB Lagarde (Thursday) Interest Rate Decision, France/Italy/Germany Germany’s Flash Inflation Rate EMU Final Consumer Confidence, Preliminary Q3 GDP Growth Rate, and Economic Sentiment

Continuation of the ECB’s rate hike cycle vs rising recession concerns are important topics simmering in the background. Impact of the conflict in Ukraine and the ongoing energy shortage on the prognosis for inflation and growth in the region.

Levels to look in the EUR/USD

The pair is currently declining by 0.25 percent at 0.9832, and a break of 0.9631 (the month’s low on October 13) would lead to 0.9535 (2022’s low on September 28) and eventually 0.9411. (weekly low June 17 2002). On the other hand, the subsequent upward barrier is at 0.9899 (weekly high October 24), then comes with 0.9999 (month top October 4), and lastly 1.0050. (weekly high September 20)

Technical Indicators

Simple Moving Averages – Daily

Weekly