EUR/USD Faces Uncertainty as Eurozone and US Data Loom Ahead...

23 de out. de 2023

EUR/USD Faces Uncertainty as Eurozone and US Data Loom Ahead of ECB Meeting


The EUR/USD pair experienced a downturn during the early Asian trading session on Monday, retracing from the psychologically significant 1.06155 level. As market participants brace for a week filled with economic data releases, including the European Central Bank (ECB) meeting on Thursday, the major currency pair is trading around 1.0586, marking a 0.07% loss for the day.

ECB's Rate Hike Cycle in Question
Economists surveyed by Reuters believe that the ECB's rate-hiking cycle has reached its conclusion. However, they also anticipate that the ECB won't start easing its monetary policy until at least July 2024, as the battle against persistently high inflation remains a top priority. This outlook on ECB policy may impact the Euro's performance in the coming months.

European Union's Energy Dilemma
In addition to monetary policy concerns, the European Union is contemplating extending the emergency cap on gas prices introduced in February. Worries about the ongoing Middle East crisis and the sabotage of a Baltic pipeline are fueling concerns that energy prices could soar once more this winter. The Eurozone energy crisis has the potential to exert downward pressure on the Euro and pose a challenge to the EUR/USD pair. Geopolitical tensions in the Middle East also continue to cast a shadow, with any escalation likely to weigh on riskier currencies like the Euro.

Fed Signals Rate Stability
On the other side of the Atlantic, the Federal Reserve (Fed) is signaling a pause in its interest rate policies. Fed Chair Jerome Powell and several other Fed officials have indicated that interest rates will remain steady in their November meeting. Powell expressed a desire to assess economic data in the coming months before making any moves. However, he noted that further tightening may be necessary if the economy demonstrates above-trend growth or if the labor market shows signs of stabilization.

Mixed Messages from Fed Officials
The Fed's message is mixed, as Atlanta Federal Reserve President Raphael Bostic doesn't anticipate a rate cut until the middle of next year, while Fed Philadelphia President Patrick Harker favors maintaining current interest rates. Fed Cleveland President Loretta Mester even suggested that the central bank might be at or near the peak of the rate hike cycle. These varying views add another layer of uncertainty to the market.

Upcoming Data Points
As the week unfolds, traders will closely monitor the release of German and Eurozone HCOB PMI data on Tuesday. Thursday brings the ECB's monetary policy decision and ECB President Christine Lagarde's press conference. In the US, data on S&P Global PMI, Q3 GDP growth, and Core Personal Consumption Expenditures (PCE) will be watched closely for cues that could influence the EUR/USD pair's direction.

Technical Analysis
From a technical perspective, the pair appears to be rebounding from the 1.06155 level, with the M30 chart showing a double top formation. This pattern suggests the potential for a bearish move that could push the price lower. The overall bias remains bearish, and the identified chart areas may serve as potential pullback zones to validate this bias.

In conclusion, the EUR/USD pair is navigating a complex landscape, driven by economic data, central bank policies, and geopolitical events. Traders are eagerly awaiting these key developments to gain clarity on the future direction of this major currency pair.



Our preference

Below 1.06500 look for further downside with 1.0550 & 1.0500 as targets.