The Euro faced resistance beyond the 1.1000 mark against the US Dollar on Wednesday, prompting a retreat to the 1.0990 region following the opening bell in Europe. Conversely, the US Dollar struggled without a definitive direction, hovering around 102.70, recovering from earlier lows in the 102.50-102.45 band, as indicated by the USD Index (DXY).
The ongoing monetary policy landscape continues to keep investors on edge, with speculation about potential interest rate cuts by both the Federal Reserve (Fed) and the European Central Bank (ECB) in the spring of 2024.
In the Eurozone, focus turns to the release of Germany’s flash Inflation Rate for November, while across the Atlantic, the advanced Q3 GDP Growth Rate, preliminary Goods Trade Balance figures, Mortgage Applications, and the Fed’s Beige Book are set to dominate market attention.
Cleveland Fed Loretta Mester (2024 voter, hawk) is also scheduled to speak, adding to the mix of influential factors affecting the currency market.
Daily Digest Market Movers: Euro Challenges 1.1000 Region Again
The Euro alternated gains and losses against the USD as investors grappled with uncertain monetary policies.
Both US and German yields continued their descent midweek, with market expectations leaning towards a potential Fed interest rate cut in Q2 2024 and an ECB rate cut in H2 2024.
ECB’s Luis De Guindos expressed concerns about banks delaying passing higher rates to savers.
BoJ’s Seiji Adachi highlighted the need for a positive wage-inflation cycle to change stance.
Technical Analysis: Euro Eyes 1.1064
EUR/USD saw further upside momentum, reaching new monthly highs near 1.1020 on Wednesday.
The November high of 1.1017 becomes the immediate target, followed by the August top of 1.1064 and another weekly peak of 1.1149, all preceding the 2023 high of 1.1275.
Corrective declines should find initial support around the crucial 200-day SMA at 1.0814, followed by the temporary 55-day SMA at 1.0671. Further support lies at the weekly low of 1.0495, followed by the 2023 low of 1.0448.
The bullish outlook for the pair remains unchanged as long as it trades above the 200-day SMA. The intricate dynamics of monetary policies and economic indicators continue to shape the Euro’s trajectory against the US Dollar, with investors closely monitoring key levels for potential shifts in the currency market.