EUR/USD Vulnerability: The Lower End Feels the Pressure
EUR/USD Vulnerability: The Lower End Feels the Pressure
Early in the European trading session on Monday, the Euro (EUR) finds itself under pressure against the US Dollar (USD), resulting in a relatively tight trading range for EUR/USD, oscillating between 1.0570 and 1.0540.
Upon close inspection, we observe the EUR/USD pair experiencing substantial pressure from the USD. During the previous session, the price movement aligned with our analysis, featuring the appearance of a Gartley Trigger, which contributed to a short setup. The price continues to trade below the 200-day moving average, and the overall picture suggests that it is operating within a range, with 1.04500 acting as support and approximately 1.0700 serving as resistance within this sideways corridor. For now, our stance on the EUR remains bearish, subject to potential shifts based on upcoming economic news.
In terms of fundamentals, it's crucial to discuss the monetary policy landscape. There's a growing consensus among market participants that the Federal Reserve (Fed) will maintain its current stance, keeping interest rates unchanged at the upcoming meeting on November 1. However, the possibility of a rate adjustment in December remains on the table, a view that gains support from the robust performance of the US economy and persistent inflationary pressures.
Shifting our focus to the European Central Bank (ECB), no surprises emerged from its event on October 26, where policymakers unanimously voted to leave interest rates unaltered. ECB President Christine Lagarde reiterated the ongoing need to address inflation challenges, while it is expected that inflation will continue to exceed the target rate for an extended period. Lagarde's acknowledgment of downside risks to the economic outlook added a bearish tone to the meeting. The EUR's vulnerability against the USD can be attributed to these factors in the current landscape.
Our preference
Short positions below 1.06250 with targets at 1.0535 & 1.0500 in extension.
Early in the European trading session on Monday, the Euro (EUR) finds itself under pressure against the US Dollar (USD), resulting in a relatively tight trading range for EUR/USD, oscillating between 1.0570 and 1.0540.
Upon close inspection, we observe the EUR/USD pair experiencing substantial pressure from the USD. During the previous session, the price movement aligned with our analysis, featuring the appearance of a Gartley Trigger, which contributed to a short setup. The price continues to trade below the 200-day moving average, and the overall picture suggests that it is operating within a range, with 1.04500 acting as support and approximately 1.0700 serving as resistance within this sideways corridor. For now, our stance on the EUR remains bearish, subject to potential shifts based on upcoming economic news.
In terms of fundamentals, it's crucial to discuss the monetary policy landscape. There's a growing consensus among market participants that the Federal Reserve (Fed) will maintain its current stance, keeping interest rates unchanged at the upcoming meeting on November 1. However, the possibility of a rate adjustment in December remains on the table, a view that gains support from the robust performance of the US economy and persistent inflationary pressures.
Shifting our focus to the European Central Bank (ECB), no surprises emerged from its event on October 26, where policymakers unanimously voted to leave interest rates unaltered. ECB President Christine Lagarde reiterated the ongoing need to address inflation challenges, while it is expected that inflation will continue to exceed the target rate for an extended period. Lagarde's acknowledgment of downside risks to the economic outlook added a bearish tone to the meeting. The EUR's vulnerability against the USD can be attributed to these factors in the current landscape.
Our preference
Short positions below 1.06250 with targets at 1.0535 & 1.0500 in extension.
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