EUR/USD and a Run at $1.03 in the Hands of Economic Growth Forecasts
It is a busy day for the EUR/USD on the economic calendar. From Germany, finalized inflation figures for October are due. Today’s stats should have a muted impact on the EUR/USD, barring downward revisions.
However, the European Commission will release the Economic Growth Forecasts today. With the ECB waiting on projections to decide the magnitude of December’s policy move, we expect today’s forecasts to influence.
Following the release, ECB Member commentary will be in the spotlight, with Luis de Guindos and Philip Lane speaking today. Expect comments relating to inflation and monetary policy to influence.
EUR/USD Price Action
At the time of writing, the EUR was down 0.11% to $1.01961. A bearish start to the day saw the EUR/USD fall from an early high of $1.02076 to a low of $1.01938.
The EUR/USD needs to avoid the $1.0122 pivot to target the First Major Resistance Level (R1) at $1.0308. EUR-friendly EU growth forecasts and hawkish ECB member chatter would support a breakout from $1.0250.
In the case of an extended rally, the bulls will likely take a run at the Second Major Resistance Level (R2) at $1.0408. The Third Major Resistance Level (R3) sits at $1.0694.
A fall through the pivot would bring the First Major Support Level (S1) at $1.0021 into play. However, barring dire growth forecasts, the EUR/USD pair should avoid sub-$1.00 and Second Major Support Level (S2) at $0.9835.
The third Major Support Level (S3) sits at $0.9549.
Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 50-day EMA ($0.99856). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.
A hold above S1 ($1.0021) and the 50-day EMA ($0.99856) would support a breakout from R1 ($1.0308) to bring R2 ($1.0408) into view. However, a fall through S1 ($1.0021) and the 50-day EMA ($0.99856) would give the bears a run at the 100-day EMA ($0.99351). The 200-day EMA sits at $0.99093.
The US Session
It is a quieter day ahead on the US economic calendar. Michigan State Consumer Sentiment numbers will be in focus.
There would need to be a marked improvement in consumer sentiment to move the dial following the US CPI report. Economists forecast the Consumer Sentiment Index to slip from 59.9 to 59.5. Softer numbers would support the Fed pivot bets.
This morning, the probability of a December 75-basis point rate hike stood at 17.0% versus 48.0% one week ago. Barring hawkish FOMC member chatter, bets of a Fed December pivot should remain firm today.
According to the economic calendar, no FOMC members are due to speak today, leaving the markets to monitor chatter with the media.