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The EUR/USD witnessed a notable uptick of 1.00% in its valuation. After a 0.49% gain observed on the preceding trading day, the EUR/USD concluded the session at a closing rate of $1.07277. During the trading day, the currency pair exhibited fluctuations. Commencing with a trough at $1.06145 and subsequently ascending to a zenith at $1.07467.
Upcoming Market Insights: German Factory Orders and Eurozone Services PMI
In the imminent trading week, early market participants’ focus will be directed towards German factory orders. It is imperative to recognize that the manufacturing sector in Germany. That albeit constituting less than 30% of the nation’s overall economic output, retains significance. Any sustained deterioration in the sector’s operational activity would serve as an indicator of dwindling demand dynamics. Economists have prognosticated a 1.0% decline in factory orders for the month of September. Following a 3.9% upswing noted in the preceding month of August.
Furthermore, the Eurozone’s services Purchasing Managers’ Index (PMIs) warrant prudent consideration. Revisions to the preliminary PMI data for October, alongside the PMI metrics for Italy, are poised to exert a substantial influence on buyer sentiment in the context of the EUR/USD. As per the preliminary survey findings, the Eurozone Services PMI contracted from 48.7 to 47.8 in October. It is paramount to recognize that the services sector is a dominant contributor. As accounting for over 70% of the Eurozone’s economic activity. Subpar performance within this sector is expected to heighten concerns regarding the potential onset of a recession.
Also Read: USD/EUR Pair: Holding Steady Above 1.0550 Ahead of Fed Decision
It is noteworthy that an attenuated demand outlook may alleviate the pressure on the European Central Bank (ECB) to persist with higher interest rates for an extended duration. In light of this, market participants may initiate discussions concerning the prospective timing of an ECB interest rate reduction.
Market Focus: FOMC Remarks and EUR/USD Trends Amid Economic Indicators
On the ensuing Monday, the remarks provided by Federal Open Market Committee (FOMC) members may exert a noteworthy impact on market sentiment concerning the Federal Reserve’s interest rate trajectory. Notably, FOMC voting member Lisa Cook is slated to deliver a speech. The market will vigilantly scrutinize reactions in response to the US Jobs Report and the forward guidance regarding interest rates. Presently, the market is in anticipation of the culmination of the Fed’s interest rate hike cycle. Any unanticipated expressions of a hawkish stance, particularly with regard to inflation, the labor market. Also the broader US economy, may take market participants by surprise.
In the immediate future, the trends witnessed in the EUR/USD exchange rate will be contingent upon economic indicators originating from Germany. A conspicuous deterioration in macroeconomic conditions may potentially bring about the consideration of an ECB interest rate cut. Nevertheless, it is imperative to underscore that the ongoing shift in the Federal Reserve’s policy stance continues to serve as a bolstering factor for the EUR/USD. It is notwithstanding the prevailing market expectations of a potential recession in the Eurozone.
EUR/USD Technical Analysis and Upcoming Market Factors
The EUR/USD is currently positioned above both the 50-day and 200-day Exponential Moving Averages (EMAs), indicating bullish price signals.
Sustaining a EUR/USD position above the 200-day EMA would provide favorable support for a potential advance towards the resistance level at $1.07838.
The forthcoming Monday places significant focus on Euro area economic indicators and Federal Reserve speeches as primary points of interest.
However, should the 200-day EMA be breached. It could open the door for bearish momentum, potentially challenging the 50-day EMA and the support level at $1.06342.
In the event of lackluster economic indicators emerging from the Euro area and the presence of hawkish sentiments in Federal Reserve speeches. The EUR/USD exchange rate may face downward pressure.
The 14-period Daily Relative Strength Index (RSI) reading of 62.01 suggests that the EUR/USD may be approaching overbought territory. Possibly signaling an upward move towards the $1.07838 resistance level.
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EUR/USD Technical Analysis: Bullish Momentum and Resistance Levels
The EUR/USD currently holds a position above both the 50-day and 200-day Exponential Moving Averages (EMAs). In which signaling a positive trend in the pricing.
Notably, the 50-day EMA has intersected with the 200-day EMA, and this alignment suggests the potential for a bullish upturn in the EUR/USD.
In the event of the EUR/USD breaking through the resistance level at $1.07838. As it would empower the bullish stance, potentially driving the rate towards the $1.08 mark.
On the contrary, a drop below $1.07 would introduce the support level at $1.06342 into consideration, alongside the EMAs.
Upon analyzing the 4-hour chart, the 14-period Relative Strength Index (RSI) with a reading of 69.58 indicates a potential movement in the EUR/USD towards $1.0750 before entering an overbought phase.
Source: FX Street
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Disclaimer:
Please note that this article serves solely for informational purposes. As such, it is not financial advice. We strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.
