Oct 14, 2022
VOT Research Desk
Market Analytics and Considerations
Following the mixed macroeconomic data releases from the US, the EUR/USD reached a high of 0.9771. Retail sales were essentially steady in September, while the UoM survey’s estimate of consumer inflation over the next five years increased from 2.7% to 2.9%. Stocks are falling as the dollar rises, suggesting a gloomy sentiment.
Despite moving over 0.9800 earlier in the day, EUR/USD was unable to close above it for a four-hour period. The pair appears to be failing to build bullish momentum as the Relative Strength Index (RSI) indicator remains close to 50.
If somehow the pair is able to turn 0.9800 into support, it may continue to rise toward 0.9880 (200-period SMA, Fibonacci 61.8% retracement), 0.9840 (Fibonacci 50% price correction of the most recent downturn), and 0.9900. (psychological level).
0.9750 (Fibonacci 23.6% correction, 100-period SMA) serves as important support on the downside. If buyers are unable to hold that level, further losses could be seen toward 0.9730 (20-period SMA), 0.9680 (stationary level), and 0.9630 (October 13 bottom).
After closing in positive territory on Thursday, the EUR/USD pair has entered a consolidation phase below 0.9800. While the short-term forecast suggests a neutral tilt during European trading hours, it may be challenging for the pair to gain bullish momentum if risk flows don’t continue to rule the financial markets.
The Core Consumer Price Index (CPI), which measures yearly changes in consumer prices, rose from 6.3% in August to 6.6% in September, according to statistics issued by the US Bureau of Labor Statistics on Thursday. This data exceeded analysts’ expectations of 6.5% and sparked a dollar surge, which caused the EUR/USD to fall to a new two-week bottom close to 0.9630.
However, following the opening bell, Wall Street’s major indexes rocketed higher in spite of heated inflation statistics that saw the US dollar falling against its peers. Investors could exhale a sigh of relief because they decided against speculating on a 100 basis point Fed rate increase in November. US stock index futures are essentially unchanged for the day as of early Friday.
Data on September’s retail sales will be presented on the US economic docket. Moreover, the preliminary results of the October Consumer Sentiment Survey will be released by the University of Michigan (UoM).
The UoM survey’s 5-year Consumer Inflation Prediction element fell from 2.9% in August to 2.7% in September. The US stock markets may try to finish the week on a strong note and allow EUR/USD to move higher in the event that markets see another fall in long-run inflation predictions. On the other side, the pair may be forced to become bearish if there is a negative move in risk sentiment after the report.
