EUR/USD and $1.010 in the Hands Prelim Q3 GDP and Inflation Numbers

It is a busy day for the EUR/USD. Following Thursday’s ECB policy decision and press conference, the market focus returns to the stats. Prelim Q3 GDP and October inflation for France and Germany will draw plenty of interest.

On Thursday, ECB President Lagarde talked of the need to wait until December for a data set to project growth and inflation. Today’s numbers will likely be influential to the ECB’s next move.

The GDP forecasts are EUR/USD mixed. Economists forecast the German economy to contract by 0.2% and the French economy to expand by 0.2%. However, the inflation forecasts are EUR/USD positive. Economists forecast the French annual rate of inflation to pick up from 5.6% to 5.7% and for Germany’s to pick up from 10.0% to 10.1%.

Other stats include Eurozone consumer confidence and Italian inflation numbers that will also influence. Economists forecast Italy’s annual inflation rate to accelerate from 8.9% to 9.6%.

On the ECB calendar, no members are due to deliver speeches, leaving the markets to monitor chatter with the media. However, several ECB releases could garner interest, including the Publication of the ECB Survey of Professional Forecasters and the Economic Bulletin pre-release.

EUR/USD Price Action

At the time of writing, the EUR was up 0.06% to $0.99705. A mixed start to the day saw the EUR/USD fall to an early low of $0.99613 before rising to a high of $0.99722.

Technical Indicators

The EUR/USD needs to move through the $1.0005 pivot to target the First Major Resistance Level (R1) at $1.0141. Following the numbers from the US on Thursday, today’s stats from France and Germany will need to be EUR-friendly to support a breakout from the Thursday high of $1.00937.

In the case of an extended rally, the bulls will likely take a run at the Second Major Resistance Level (R2) at $1.0141. The Third Major Resistance Level (R3) sits at $1.0278.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.9917 in play. In the case of an extended sell-off, the EUR/USD pair would likely test the Second Major Support Level (S2) at $0.9869.

The third Major Support Level (S3) sits at $0.9733.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 50-day EMA ($0.99018). The 50-day EMA pulled away from the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

Avoiding S1 ($0.9917) and the 50-day EMA ($0.99018) would give the bulls a run at R1 ($1.0053). However, a fall through S1 ($0.9917) and the 50-day EMA ($0.99018) would bring the 200-day EMA ($0.98715) and S2 ($0.9869) into view. The 100-day EMA sits at $0.98596.

The US Session

It is a busy day ahead on the US economic calendar, with inflation, personal spending, and consumer sentiment in focus.

Following the better-than-expected Q3 GDP numbers on Thursday, a pickup in inflation and personal spending could raise further question marks over the market expectation of a Fed pivot.

However, no FOMC members will speak to guide the markets following today’s stats. The FOMC blackout period started on Saturday and will extend until November 3.

Going into the Friday session, the FedWatch Tool had the probability of November and December rate hikes at 88.5% and 34.1%, respectively. One week ago, the likelihood of a 75-basis point hike in December stood at 75.3%.