Daily Technical Analysis EUR/USD by OnEquity

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Daily Technical Analysis EUR/USD: Indecision Dominates Trading
The EUR/USD pair held steady on Tuesday, unable to regain the 1.1000 level but pausing the recent Fibonacci retracement from the 1.1200 area. The euro, which had seen losses after hitting a one-year high in late September, is again falling toward the 1.0950 zone, as the dollar strengthened across the board.
European data has been largely tepid this week, and with the European Central Bank expected to raise rates next week, the economic calendar will be filled with important data releases.
On Wednesday, the latest minutes of the Federal Reserve’s September meeting will be released, which will provide plenty for dollar traders to analyze. Markets were expecting a 25 basis point rate cut in November after the Fed signaled a potential pause in tightening during its September meeting. However, continued core inflation above the Fed’s target along with U.S. jobs numbers, which markedly beat estimates the previous week, have halted hopes for a rate cut.

According to the CME’s FedWatch tool, rate markets see about a 90% chance that the Fed will make a 25 basis point rate cut on November 7. Fed officials have indicated that a significant weakening in the U.S. labor market would be necessary for additional rate cuts.

Thursday’s U.S. inflation report will be the focal point of the week for the Forex market, as it will determine how market sentiment evolves in line with estimates of a rate cut by the Fed. A lower-than-expected reading would boost hopes that the Fed will cut interest rates at least twice more in the remainder of the year, which could weaken the dollar against the euro.

Markets are estimating a figure of about 2.3% year-on-year and 0.1% month-on-month. Any result above this is expected to be strong. Any data above this figure could push back estimates of a rate cut and could cause the euro to struggle to end the week. Other risks contributing to the euro’s decline against the dollar include ongoing concerns over tensions in the Middle East. Israel has also promised a forceful response to last week’s missile attack by Iran. The size and nature of the attack could be considerable, driving demand for safe-haven currencies such as the USD, JPY, and CHF.

EUR/USD Daily Technical Analysis for October 9th:​

The EUR/USD appears to be on the verge of entering a sideways phase as the daily candlesticks are establishing a consolidation pattern. The pair is trading between the 50-day and 200-day Exponential Moving Averages (EMA), with buyers attempting a recovery after EUR/USD pulled back from above the 1.1200 area.

If sellers have run out of momentum, euro bulls may challenge the 200-day EMA near 1.0900, although a prolonged decline could push prices back to the 2024 lows near 1.0600.

 

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Daily Technical Analysis EUR/USD: The Pair Extends Decline Ahead of ECB Rate Decision
The EUR/USD pair continued its bearish trend on Tuesday, dropping about one-fifth of a percent and sliding below the 200-day Exponential Moving Average (EMA). The price closed below the 1.0900 level for the first time since early August. The pair is now down nearly 3% from its late September highs, which were just above the 1.1200 level.

European banks have generally reported negative impacts following the European Central Bank’s (ECB) summer rate cut. While lending standards have remained broadly unchanged and even eased for household lending, consumer credit conditions remain tight. The rebound in demand for housing loans is based solely on the expectation of further rate cuts, which means consumers are over-leveraged in the short term. Additionally, EU banks’ net interest income, due to the ECB’s policy rate decisions, has turned negative for the first time since 2022.

At a broad level, the ECB is expected to announce a quarter-point cut to the main deposit rate in its next decision on Thursday. Markets widely anticipate a 25-basis-point rate cut, with the ECB’s main refinancing rate also expected to be reduced by nearly 25 basis points to around 3.4%, down from 3.65%.

In addition to the ECB’s decision, Thursday’s session will include the release of U.S. retail sales data for September. U.S. retail sales are expected to show a 0.3% month-over-month increase, up from 0.1% in the previous month.

However, despite the euro’s weakness against the U.S. dollar and the anticipated downward momentum, it’s worth noting that the U.S. dollar has recently been losing steam. The U.S. side of the equation, which has undoubtedly been the dominant force in the currency pair’s decline, should not be overlooked. In fact, the U.S. dollar rebounded in October as markets adjusted their expectations for interest rate cuts in 2024, following stronger-than-expected U.S. economic data. Clearly, the U.S. economy does not require an urgent pace of rate cuts. Moreover, the delay in rate cuts has boosted U.S. bond yields and strengthened the dollar.

EUR/USD Daily Technical Analysis for October 16th​

The EUR/USD exchange rate is expected to test the 200-day moving average as sellers anticipate Thursday’s ECB rate cut. The expectation of further ECB action has pushed the EUR/USD pair below the 1.10 level, with the next key target being the 200-day moving average at 1.08736.

There is a high likelihood that this level will be tested sometime before the end of October. From this expected support level, technical indicators could begin to move toward oversold territory. On the daily chart, the most significant support will be found at the 1.0775 level. Conversely, within the same time frame, the current bearish channel would not be broken without a return to the vicinity of the 1.1070 resistance level.

 

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Daily Technical Analysis EUR/USD: Approaching 1.0850, Potential Drop Amid Shifting Political Forecasts
The EUR/USD may face challenges due to shifts in market estimates regarding monetary policy and interest rate outlooks.
Currently, the U.S. dollar has gained ground as the likelihood of a rate cut by the hawkish Federal Reserve in November diminishes. Meanwhile, the European Central Bank is expected to intensify its monetary policy easing to boost economic growth in the eurozone.
The EUR/USD is showing signs of stability after the previous session’s gains around the 1.0860 level in Asian trading on Monday. Earlier expectations of a 50 basis point rate cut by the Federal Reserve next month have dissipated with the latest data revealing the resilience of the U.S. economy.
According to CME’s FedWatch tool, the probability of a 25 basis point rate cut in November has increased to 99.3%, up from 89.5% last week. U.S. retail sales rose 0.4% month-over-month in September, surpassing the 0.1% increase in August and exceeding market expectations of a 0.3% rise. Additionally, initial jobless claims dropped by 19,000 during the week ending October 11, marking the largest decline in three months. The total number of claims fell to 241,000, significantly below the estimated 260,000.
Research from Rabobank indicates that the market is interpreting recent comments from ECB officials as a sign that they are increasingly comfortable with Eurozone inflation estimates. Consequently, the European Central Bank appears to be shifting its focus toward supporting growth in the region. This has fueled speculation about the possibility of a faster pace of easing, including the potential for a larger 50 basis point interest rate cut. Such a move could put pressure on the euro and weigh on the EUR/USD pair.
The euro came under downward pressure following the European Central Bank’s recent decision to cut interest rates by 25 basis points. This move follows a significant decline in inflation, which peaked at 10.6% in October 2022 and has since dropped to 1.7% in September, now below the ECB’s 2% target.

EUR/USD Daily Technical Analysis for October 21st:​

The EUR/USD pair has been in a strong downtrend in recent days. It has dropped from 1.1200, its year-to-date high, to 1.0855, its lowest point since August 2.
The pair has turned the support level at 1.0980, the high from March 8, into resistance. It has also fallen below both the 50-day and 200-day moving averages.
Meanwhile, the Relative Strength Index (RSI) and Percentage Price Oscillator (PPO) have continued to decline. As a result, the pair is likely to continue falling, with the next key level to watch being 1.0770. This price level aligns with the lowest swings since October 3 of the previous year.

 

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Daily Technical Analysis EUR/USD: Below 1.0800 as Fed Tightening Looms
The EUR/USD remains steady at 1.0790 after posting losses in the previous session. However, the pair could be impacted by a stronger dollar, as recent positive U.S. economic data has bolstered expectations for a less dovish Fed approach in November.
On Friday, the Michigan Consumer Sentiment Index rose to 70.5 in October, up from 68.9 and beating the estimate of 69.0. Additionally, Durable Goods Orders increased by about 0.5%. Durable Goods Orders declined by 0.8% month-over-month in September, a smaller drop than the estimated 1.0% decrease.
Furthermore, increased uncertainty surrounding the Middle East conflict may have reinforced the dollar’s appeal as a safe-haven asset amid market volatility. Israel’s targeted strike against Iran early Saturday, coordinated with Washington and limited to missile sites and anti-aircraft defenses, was more muted than anticipated.
The dollar is also buoyed by uncertainty surrounding the upcoming U.S. presidential election. Republican allies of former President Donald Trump recently faced at least 10 court defeats in battleground states, which could influence the outcome of the Nov. 5 election.
European Central Bank (ECB) Governing Council member Klaas Knot emphasized on Saturday the importance of “keeping all options open” to manage risks to growth and inflation. “Maintaining full optionality would serve as a hedge against potential risks to the growth and inflation outlook,” Knot stated, adding, “Our meeting-by-meeting and data-dependent approach has served us well,” according to Reuters.

EUR/USD Daily Technical Analysis for October 28:​

The euro market has lost ground for most of the past week, though support has started to emerge around the 1.0800 level. At this stage, the market appears to show signs of a potential rebound, which could attract short sellers, especially as rising U.S. interest rates continue to drive demand for the dollar.
From a technical perspective, on the daily chart, EUR/USD seems to be correcting oversold conditions. The pair has halted below resistance at 1.0865, near the 23.6% Fibonacci retracement of the recent decline between 1.1208 and 1.0760. A more critical level is the 38.2% retracement at 1.0930.
Meanwhile, technical indicators are flat, positioned below their midlines, indicating the absence of strong buying pressure and suggesting oversold conditions. Additionally, the significantly bearish 20-day SMA is below a flat 100-day SMA, which signals sellers’ control over the market.

 

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Daily technical analysis EUR/USD: Slight Rise Above 1.0800 Ahead of U.S. & Eurozone GDP, German Inflation Data
The EUR/USD pair’s gains remain limited, with uncertainty prevailing ahead of the U.S. presidential election and critical economic data from the U.S. A potential Trump victory is seen as a possible dollar-strengthening factor, with the market currently pricing in a 60% probability for a Republican win, which could ease downward pressure on the EUR/USD in the coming days. As such, high levels of market nervousness and uncertainty are expected leading up to the election.

Job openings in the U.S. fell by 418,000 positions to 7.433 million as of the end of September, marking the lowest level since January 2021, and falling short of the 7.99 million expected, according to the Bureau of Labor Statistics. Conversely, the U.S. Conference Board’s consumer confidence index rose to 108.7 in October, up from a revised 99.2 in September and surpassing the 99.5 consensus forecast. This reading marks the highest level in nearly nine months, reflecting an improved labor market outlook.

Traders increasingly expect the Federal Reserve to implement a 25 basis-point rate cut at the upcoming November meeting, which may bolster U.S. dollar demand. Later today, during the American session, the U.S. ADP Employment Change for October and the advanced third-quarter GDP will offer insights into the Fed’s potential rate-cut pace and magnitude.

Market focus in the U.S. will remain on Non-Farm Payrolls data; a stronger-than-expected report could further support the dollar and drive EUR/USD lower over the coming weeks. Additionally, a potential Trump win, currently seen at around 60% probability, may sustain bearish pressure on the pair as election day approaches, with high levels of uncertainty expected to persist.

Across the Atlantic, the European Central Bank is anticipated to cut its deposit facility rate again, though the size of the cut remains uncertain. Forex markets are currently assigning approximately a 50% probability of a half-percentage-point rate cut at the ECB’s December meeting.

Investors will be closely watching Germany’s preliminary Consumer Price Index data and the annual GDP growth rate for the third quarter for both Germany and the eurozone. ECB Governing Council member Isabel Schnabel is also scheduled to speak later, which could provide additional context.

EUR/USD Daily Technical Analysis for October 30th​

Further weakness may emerge in the near term, with an initial target around the 1.0760 support level. If the EUR/USD pair surpasses the 9-day moving average, currently at 1.0831, a neutral outlook is plausible. However, a significant recovery would likely require a fundamental shift, limiting the pair’s potential upside.

 

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Daily Technical Analysis EUR/USD: The Pair Rises Ahead of U.S. Elections
The EUR/USD recovered some losses from the previous session, trading near 1.0880 in early Asian trading on Monday. This rise may be due to a softer U.S. dollar following weaker-than-expected October Non-Farm Payrolls data. However, uncertainty surrounding the U.S. presidential election could drive safe-haven demand, limiting the pair’s upside potential.

On Friday, U.S. Bureau of Labor Statistics data showed that NFP for October increased by only 12,000, following a revised September gain of 223,000, well below market estimates of 113,000. The unemployment rate remained steady at 4.1% in October, aligning with consensus forecasts.

According to a recent New York Times poll cited by Reuters, Democratic candidate Kamala Harris and Republican candidate Donald Trump are locked in a close race across seven key states just days before the presidential election. The poll indicates Vice President Harris has a slight lead in Nevada, North Carolina, and Wisconsin, while former President Trump leads narrowly in Arizona. The candidates are in a tight race in Michigan, Georgia, and Pennsylvania, with results within the poll’s 3.5% margin of error.

The euro was bolstered by stronger-than-expected economic growth in the third quarter and higher-than-expected inflation in the eurozone. This has led traders to revisit expectations for a larger-than-usual rate cut by the European Central Bank in December. Markets have fully priced in a 25 basis point cut to the ECB’s December deposit rate, marking the fourth cut this year after similar reductions in October, September, and June.

Preliminary data revealed the Eurozone’s Harmonized Index of Consumer Prices rose to 2.0% y-o-y in October, up from 1.7% previously and exceeding the 1.9% estimate. The annual core inflation rate remained stable at 2.7%. Additionally, the Eurozone’s GDP grew by nearly 0.4% quarter-on-quarter in the third quarter, more than doubling the second-quarter growth and surpassing estimates of 0.2%.

EUR/USD Daily Technical Analysis for November 4th:​

The euro market has rebounded slightly over the week, though it appears to be struggling to hold onto gains. Expect the market to remain volatile and range-bound around the 50-week EMA. A break above the top of the recent candle could push the market toward the 1.10 level. Conversely, the 1.0750 level serves as a critical support level to watch closely. Should it break below this level, the market may head toward 1.05, which has been a significant support level multiple times over recent years. In short, this market seems to lack clear direction and remains somewhat uncertain.

 

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Daily Technical Analysis EUR/USD: Rallies on Greenback Weakness on U.S. Election Day
The EUR/USD pair capitalized on a broad-based decline in the U.S. dollar as markets prepared for the initial results of the U.S. presidential election that began on Tuesday. The euro gained two-thirds of a percentage point, breaking above the 1.0900 level as investors anticipated favorable market conditions during the election cycle that will determine the U.S. president for the next four years.

Aside from a scheduled appearance by European Central Bank President Christine Lagarde, EU market data is relatively limited this week. Retail sales figures for the entire region are set for release on Thursday, the EU leaders’ summit concludes on Friday, and Lagarde’s appearance is scheduled for Saturday, when markets will be closed.

Election forecasts indicate a close race for the White House, with former President Donald Trump and current Vice President Kamala Harris polling within a 5% margin, depending on the results of cited polls. Equity investors, particularly those focused on the technology sector, appear to view the former president as a favorable candidate for the stock market, an uncommon choice given his advocacy for tariffs reminiscent of the Smoot-Hawley tariffs from U.S. history. Trump has intermittently suggested imposing high tariffs on all imported goods, a policy seen as inflationary.

The Federal Reserve’s next rate decision is also imminent this week. Fed Chairman Jerome Powell is expected to announce a quarter-point rate cut on Thursday, reducing the federal funds rate by 25 basis points to 4.75%. The fed funds rate had peaked at 5.5% in July 2023, and investors have been pressing for a return to a lower-rate environment, familiar since the U.S. interest rate bottomed out near 0% in early 2009.

The University of Michigan consumer confidence index, scheduled for release on Friday, is expected to reach a six-month high, with November’s reading forecasted to rise to 71.0 from last month’s 70.5.

EUR/USD Daily Technical Analysis for November 6th:​

The EUR/USD is currently holding above the 1.0900 level after a recent decline, with bullish momentum now testing the 50-day EMA at 1.0937. This area aligns with the pair’s current range, suggesting that the zone between 1.0900 and 1.0937 could act as a short-term resistance. The 200-day EMA at 1.0902 provided initial support, enabling a rebound from the early October lows, indicating a possible shift toward a bullish sentiment.

The MACD indicator on the daily chart is also showing signs of recovery, with the MACD line nearing the signal line and the histogram turning positive. This shift hints at a potential build-up in bullish momentum, though the crossover has yet to occur definitively. A clear MACD crossover, if it materializes, could support additional short-term gains. For now, traders should exercise caution as the pair approaches a pivotal resistance level, where a rejection from the 50-day EMA might lead to another bearish test.

In the near term, continued buying pressure could push the EUR/USD toward the psychological resistance at 1.1000, with further gains likely if the pair breaks above the 50-day EMA. On the downside, a drop below the 1.0900 level could take the pair back to 1.0850, and potentially to October’s lows near 1.0700. Overall, while the technicals indicate a cautiously bullish outlook, EUR/USD remains at risk of a reversal if it fails to decisively clear the moving averages.