EUR: Over 0.9700, the EUR/USD trades with contentment

Oct 10, 2022
VOT Research Desk

Key News – Insights and Analysis

The Market Perspective:

Around the 0.9700 region, the EUR/USD fluctuates between gains and losses.

On Tuesday, the dollar appears to be modestly bid above the 113.00 barrier.

Italian Industrial Production is the next item on the agenda, in ECB-speak.

After four consecutive daily declines, EUR/USD shows some signs of life and clings to the 0.9700 regions on Tuesday’s turnaround.

After hitting fresh 11-year highs above 2.35 percent at the beginning of the week, the bullish attempt in the pair comes amid marginal gains in the US dollar and a knee-jerk in the German 10-year benchmark.

The ECB’s speeches by A. Enria and P. Lane will be the only domestic release supported by Italian Industrial Production. In an otherwise empty agenda, FOMC members Harker and Mester are also scheduled to speak across the pond.

What to look for in relation to EUR EUR/USD’s downward leg so far this week? There appears to have been some initial contention in the 0.9670/65 band.

The dynamics of the dollar, concerns about geopolitics, and the divergence between the Fed and the ECB are expected to closely follow price action around the European currency in the interim. The US economy’s continued resilience is expected to continue despite the most recent results from key economic indicators.

Additionally, the sour mood surrounding the euro is exacerbated by the growing rumors of a regional recession, supported by waning sentiment gauges and a beginning slowdown in some fundamentals. This week’s key events in the euro area include: Industrial Production in the EMU, ECB Lagarde on Wednesday, Germany’s final inflation rate on Thursday, and the EMU balance of trade on Friday.

Important problems with the back boiler: Continuing the ECB’s cycle of hikes versus rising risks of a recession.

The impact on the region’s growth prospects and inflation outlook of the war in Ukraine and the ongoing energy shortage.

EUR/USD levels to keep an eye on So far, the pair is up 0.15 percent at 0.9712. A break of 0.9999, which was the weekly high on October 4, would lead to 1.0050, which was the weekly high on September 20, and 1.0197, which was the monthly high on September 12.However, there is immediate support at 0.9535 (September 28 low from 2022), followed by 0.9411 (weekly low from June 17, 2002) and then 0.9386 (weekly low from June 10, 2002).

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EUR/USD