Nov 7
VOT Research Report
Analytics and Considerations
- On Monday, the EURUSD finds support at the area of 0.9990.
- The rise in German 10-year bund rates continues to multi-day highs.
- The October Germany Construction PMI increased to 43.8.
The EURUSD extends Friday’s gains and tinkers with the 0.9970 area at the start of the week.
EURUSD is supported at about 0.9900.
While the greenback continues to lose steam, the first knee-jerk in the EURUSD finds support in the 0.9900 range so far on Monday and manages to tango with the region of recent tops it around 0.9970/80 band.
As investors continue to examine the most recent US jobs report findings (due out on Friday), their appetite for risk is still strong. At the same time, however, the US dollar is still under pressure, which encourages the USD Index (DXY) to lose more territory.
Germany’s Construction PMI climbed to 43.8 in October according to domestic data (from 41.8). The ECB’s Panetta is scheduled to speak later. Before Collins and Mester’s statements at the FOMC, Consumer Credit Change will be the only release from the UK.
Observations regarding EUR
The EURUSD maintains its Friday rally and looks like it will shortly challenge the important parity zone.
Price movement surrounding the euro is anticipated to closely track dollar trends, geopolitical tensions, and the Fed-ECB split in the interim. The primary barrier to a long-term rebound in the pair is now the Fed’s recent decision to raise rates and the possibility of a tighter stance going forward.
In the long run, the weak feeling around the euro is further exacerbated by the growing suspicion of a potential regional recession, which appears to be supported by declining sentiment indicators as well as an impending downturn in some fundamentals.
The Eurogroup meetings, the Germany Construction PMI (Monday), the EMU Retail Sales (Tuesday), the Italy Industrial Production (Thursday), and the Germany Final Inflation Rate are this week’s major events in the Eurozone (Friday).
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 watch in the EURUSD
The pair is currently up 0.18% at 0.9975 and will encounter resistance at psychological level 1.0000, followed by monthly highs of 1.0093 and 1.0197. (monthly high September 12). On the other hand, if 0.9704 (the week’s bottom on October 21) were to be breached, 0.9631 (the month’s low on October 13) and 0.9535 would be the next targets (2022 low September 28).
