Oct 10, 2022
VOT Research Desk

Key News – Insights and Analysis

The Market Perspective:

The stronger momentum of the dollar around 0.9700 hurts the EUR/USD.

The dollar is navigating multi-session highs in a risk-off environment.

Along with Evans and Brainard from the Fed, ECB Lane will also talk later.

Investors’ reluctance about the euro gains momentum, pushing EUR/USD to test the 0.9700 level at the start of the week.

EUR/USD continues its bearish trend for the fourth day in a row and tests the 0.9700 area in light of the continued strength of the dollar following the release of another positive Nonfarm Payrolls report on Friday.

Indeed, the USD Index (DXY) reaches new 2-week highs above the 113.00 mark due to the preference for the greenback and the unwavering belief that the Fed may raise rates by 75 basis points at its meeting on November 2.

Following three daily drops, the knee-jerk in the pair coincides with a corrective decline in German 10-year bund yields.

Other than a speech by P.Lane, a member of the ECB Board, there is nothing data-related scheduled in Europe.The Fed’s Evans and Brainard speeches will be the only scheduled events overseas.

What to watch for in the EUR area On Monday, the EUR/USD pair accelerated its losses and pushed against the primary support zone of 0.9700.

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.

Watch for EUR/USD levels.

Currently at 0.9698, the pair is down 0.43%. It will find immediate support around 0.9535 (2022 low September 28), followed by 0.9411 (weekly low June 17 2002), and then 0.9386. (weekly low June 10 2002). On the plus side, a break above 0.9999 (the weekly high set on October 4) would aim for 1.0003 (the 55-day SMA) before reaching 1.0050. (weekly high September 20).

EURO Pivots (Daily)

Time : 04:47:06 Indicators (daily)