EUR/USD Eyes a Return to $0.99 on Bullish Economic Indicators

It was a busy start to the European session for the EUR/USD. Car registrations drew interest ahead of ZEW Economic Sentiment figures for Germany and the Eurozone.

Car registrations jumped in September, reversing falls from the previous month. The UK delivered the strongest numbers in percentage terms, with car registrations surging by 227.2%. Italy (+55.9%) and France (+54.4%) also recorded marked increases, while Germany trailed its neighbors (+12.9%).

According to the ACEA, EU passenger registrations increased by 9.6% in September compared with September 2021. EU-wide, car registrations increased for a second consecutive month, year-over-year, while car registrations were down 9.9% from January to September. The rise in car registrations came despite the ongoing EU energy crisis.

ZEW Economic Sentiment figures for Germany and the Eurozone were mixed. In September, the ZEW Economic Sentiment Indicator increased from -61.9 to -59.2, while the Current Conditions Indicator fell from -60.5 to -72.2. Economists forecast declines to -65.7 and -68.0, respectively.

The ZEW Economic Sentiment Indicator for the Eurozone increased from -60.7 to -59.7. Economists forecast a fall to -61.2.

Following today’s economic indicators, ECB member commentary will influence the EUR/USD pair. ECB member Isabel Schnabel will speak today.

EUR/USD Price Action

At the time of writing, the EUR was up 0.09% to $0.98459.

A bearish start to the day saw the EUR/USD fall to an early low of $0.98231. Responding to the car registration numbers, the EUR struck a high of $0.98736 before easing back.

Technical Indicators

The EUR/USD needs to avoid a fall through the $0.9803 pivot to target the First Major Resistance Level (R1) at $0.9886 and $0.99. ECB member chatter will have to be hawkish to support a breakout from the morning high of $0.98736.

In the case of an extended rally, the bulls will take a run at the Second Major Resistance Level (R2) at $0.9935. The Third Major Resistance Level (R3) sits at $1.0068.

A fall through the pivot would bring the First Major Support Level (S1) at $0.9754 into play. In the case of an extended sell-off, the EUR/USD pair would likely test support at the Second Major Support Level (S2) at $0.9670 and $0.9650.

The third Major Support Level (S3) sits at $0.9538.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 100-day EMA, currently at $0.97920. The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A EUR/USD breakout from the 200-day EMA ($0.98582) would give the bulls a run at R1 ($0.9886) to target $0.99 and R2 ($0.9935). However, a fall through the 100-day EMA ($0.97920) would give the bears a run at the 50-day EMA ($0.97723) and S1 ($0.9754).

The US Session

It is a quiet day ahead on the US economic calendar, with industrial production numbers for September in focus.

An unexpected fall in production could ease bets of a hawkish December move.

There are no FOMC member speeches on the economic calendar for the markets to consider, leaving chatter to the media in focus. FOMC members have remained united on the Fed’s policy goals. Any deviation from the script could see the dollar (DXY) lose more ground following the 1.08% slide to 112.083 on Monday.

This morning, the probability of a 75-basis point December rate hike stood at 69.1%, up from 65.7% one day ago.