EUR/USD and a Return to Parity in the Hands of Euro Area Stats

It is a busy day for the EUR/USD. German retail sales will draw interest ahead of Q3 GDP numbers for Italy. However, while both sets of numbers will influence, prelim October inflation and Q3 GDP numbers for the Eurozone will likely draw the most attention.

Softer inflation and weak growth could give the ECB an option to deliver a less hawkish move in December. In the last ECB press conference, ECB President Lagarde noted that the ECB would need to wait until December to provide growth and inflation forecasts. Therefore, today’s numbers will likely influence projections and the ECB.

Away from the stats, ECB Philip Lane will deliver a speech at Denmark’s Nationalbank conference. References to today’s stats and monetary policy would move the dial.

EUR/USD Price Action

At the time of writing, the EUR was down 0.09% to $0.99569. A mixed start to the day saw the EUR/USD fall to an early low of $0.99425 before rising to a high of $0.99648.

Technical Indicators

The EUR/USD needs to move through the $0.9964 pivot to target the First Major Resistance Level (R1) at $1.0001. With the US economic calendar on the quiet side, today’s stats need to impress to support a return to parity.

In the case of an extended rally, the bulls will likely take a run at the Second Major Resistance Level (R2) at $1.0035. The Third Major Resistance Level (R3) sits at $1.0107.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.9929 in play. In the case of an extended sell-off, the EUR/USD pair would likely test the Second Major Support Level (S2) at $0.9892 and support at $0.9850.

The third Major Support Level (S3) sits at $0.9821.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 50-day EMA ($0.99139). The 50-day EMA pulled away from the 200-day EMA, with the 100-day EMA closing in on the 200-day EMA, delivering bullish signals.

Avoiding S1 ($0.9929) and the 50-day EMA ($0.99139) would give the bulls a run at R1 ($1.0001). However, a fall through S1 ($0.9929) and the 50-day EMA ($0.99139) would bring S2 ($0.9892) and the 200-day EMA ($0.98766) into view. The 100-day EMA sits at $0.98709.

The US Session

It is a quiet day ahead on the US economic calendar. Chicago PMI and Dallas Fed Manufacturing numbers for October are in focus today. However, barring dire numbers, we don’t expect the stats to influence market sentiment toward the November and December policy moves.

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 Monday session, the FedWatch Tool had the probability of November and December rate hikes at 80.3% and 44.3%, respectively. One week ago, the likelihood of a 75-basis point hike in December stood at 45.6%.