EURUSD: digesting the 50 bps
The long expected rate cuts finally came to fruition during the September FOMC meeting. Although the market was unsure whether the cut will be 25 bps or 50 bps, still, the Fed decided for a stronger rate cut this time, with additional cuts till the end of this year. Analysts are noting that the current 50 bps rate cut indicates that the Fed is finished with its efforts to deal with inflation and now they are turning their focus on the jobs market. As for other macro indicators posted for the US during the previous week, the Retail Sales was higher by 0,1% in August for the month, higher from market expectation of -0,2%. This brings retail sales to the level of 2,1% on a yearly basis. The Industrial Production was higher by 0,8% in August, which was higher from forecasted 0,2%. Still, the IP stands at 0% compared to the previous year. Preliminary building permits in August were 1.475M, modestly higher from expected 1,42M. The real estate sector in the US continues to struggle in the environment of high interest rates, as existing home sales dropped by additional -2,5% in August, lower from forecasted 0,9%.
The ZEW Economic Sentiment Index in September for Germany reached the level of 3.6, which was significantly below 19,2 posted for the previous month and forecasted 18,0. Inflation rate in the EuroZone, final for August was 2,2% and in line with market expectations. The core inflation continues to be modestly elevated at a level of 2.8% on the yearly basis. The producers price index in Germany was higher by 0,2% in August while on a yearly basis the index holds in a negative territory of -0,8%.
The market was under the sentiment of the FOMC meeting during the previous week, so some dose of nervousness was evident on the market prices. The currency pair started the previous week around the level of 1,10 and headed toward the upside during the rest of the week. The highest weekly level reached was 1,1180, while the pair is closing the week at the level of 1,1162. The RSI headed toward the overbought market side, however, reached its highest level at 62. This leaves the space for the eurusd to reach highest grounds until the clear overbought market side is reached, and potential for a short reversal. The moving average of 50 days continues to strongly diverge from MA200, leaving no indication over a potential cross in the coming period.
The market will use the week ahead to digest the latest information from the FOMC meeting. Current charts are showing a potential for a short term reversal, but should not be expected to be the higher one. The 1,11 support line could be tested in the coming week. On the opposite side, there is some potential for the 1,12 resistance line to be tested.
Important news to watch during the week ahead are:
EUR: HCOB PMI Flash for September for Germany, Ifo Business Climate in September for Germany, GfK Consumer Confidence in October for Germany, Unemployment rate in Germany in September.
USD: Durable Goods orders in August, GDP Growth Rate final for Q2, Fed Chair Powell speech, PCE Price Index for August, Personal Income and Personal Spending, Michigan Consumer Sentiment final for September.
The ZEW Economic Sentiment Index in September for Germany reached the level of 3.6, which was significantly below 19,2 posted for the previous month and forecasted 18,0. Inflation rate in the EuroZone, final for August was 2,2% and in line with market expectations. The core inflation continues to be modestly elevated at a level of 2.8% on the yearly basis. The producers price index in Germany was higher by 0,2% in August while on a yearly basis the index holds in a negative territory of -0,8%.
The market was under the sentiment of the FOMC meeting during the previous week, so some dose of nervousness was evident on the market prices. The currency pair started the previous week around the level of 1,10 and headed toward the upside during the rest of the week. The highest weekly level reached was 1,1180, while the pair is closing the week at the level of 1,1162. The RSI headed toward the overbought market side, however, reached its highest level at 62. This leaves the space for the eurusd to reach highest grounds until the clear overbought market side is reached, and potential for a short reversal. The moving average of 50 days continues to strongly diverge from MA200, leaving no indication over a potential cross in the coming period.
The market will use the week ahead to digest the latest information from the FOMC meeting. Current charts are showing a potential for a short term reversal, but should not be expected to be the higher one. The 1,11 support line could be tested in the coming week. On the opposite side, there is some potential for the 1,12 resistance line to be tested.
Important news to watch during the week ahead are:
EUR: HCOB PMI Flash for September for Germany, Ifo Business Climate in September for Germany, GfK Consumer Confidence in October for Germany, Unemployment rate in Germany in September.
USD: Durable Goods orders in August, GDP Growth Rate final for Q2, Fed Chair Powell speech, PCE Price Index for August, Personal Income and Personal Spending, Michigan Consumer Sentiment final for September.
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