EUR/USD at Risk of Sub-$0.98 as Focus Shifts to US stats and the Fed

It is a quiet day for the EUR/USD on the economic calendar. The German economy is back in the spotlight, with import price index numbers for September due. However, following Monday’s Q3 GDP and October inflation figures for the Eurozone, the numbers are unlikely to have a material impact on the EUR/USD.

With the economic calendar on the lighter side, the market focus will remain on the Fed, which places greater emphasis on the US economic calendar.

Away from the stats, the markets have no ECB member speeches to consider, leaving ECB member chatter with the media to monitor.

EUR/USD Price Action

At the time of writing, the EUR was up 0.07% to $0.98850. A range-bound start to the day saw the EUR/USD fall to an early low of $0.98710 before rising to a high of $0.98865.

Technical Indicators

The EUR/USD needs to move through the $0.9905 pivot to target the First Major Resistance Level (R1) at $0.9938 and the Monday high of $0.99658. With the Eurozone economic calendar on the quiet side, market risk sentiment will likely influence ahead of the US session.

In the case of an extended rally, the bulls will likely take a run at the Second Major Resistance Level (R2) at $0.9998 and parity. The Third Major Resistance Level (R3) sits at $1.0091.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.9845 in play. In the case of an extended sell-off, the EUR/USD pair would likely test the Second Major Support Level (S2) at $0.9812 and support at $0.98.

The third Major Support Level (S3) sits at $0.9719.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bearish signal. The EUR/USD sits below the 50-day EMA ($0.99117). The 50-day EMA narrowed to the 200-day EMA, with the 100-day EMA pulling back from the 200-day EMA. The  signals are bearish.

A EUR/USD move through the 50-day EMA ($0.99117) would support a breakout from R1 ($0.9938) to target R2 ($0.9998). However, a fall through the 200-day ($0.98782) and the 100-day ($0.98746) EMAs would give the bears a run at S1 ($0.9845).

The US Session

It is a busier day ahead on the US economic calendar. Markit and ISM Manufacturing PMI and JOLTs job openings will be in focus. With the Fed delivering its November policy decision on Wednesday, the ISM Manufacturing PMI and JOLTs job openings will garner the most interest.

For both reports, the markets will look beyond the headline numbers. From the ISM survey, new orders, cost pressures, and employment will likely be focal points, with quit rates an area of interest from the JOLTs report.

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.

This morning, the FedWatch Tool had the probability of November and December rate hikes at 89.2% and 47.1%, respectively. One week ago, the likelihood of a 75-basis point hike in December stood at 54.9%.