EUR/USD Eyes GDP and ZEW Economic Sentiment to Target $1.0450

It is a busy day for the EUR/USD on the economic calendar. Following the better-than-expected Eurozone industrial production figures on Monday, second estimate Q3 GDP numbers will be in the spotlight. Considering the EU Commission Growth Forecasts, revisions to the numbers will influence.

Other stats include finalized October inflation figures for France and Spain, wholesale inflation numbers for Germany, euro area trade, and ZEW Economic Sentiment numbers for Germany and the Eurozone.

The ZEW Economic Sentiment figures will have the most influence barring a spike in wholesale inflation. However, the ZEW numbers coincide with the release of the Eurozone’s second estimate Q3 GDP figures.

In line with or better-than-expected ZEW and upward revisions to GDP numbers should deliver EUR/USD support.

Economists forecast the Eurozone economy to expand by 0.3% in Q3, which is in line with the first estimate. However, economists forecast Germany’s ZEW Economic Sentiment Index to rise from -59.2 to -50.

Ahead of today’s numbers, market risk sentiment will provide direction. Industrial production, fixed asset investment, and retail sales figures from China will set the tone.

Today’s economic calendar will likely draw the interest of ECB members. ECB member Frank Elderson speaks today (1830 CET).

EUR/USD Price Action

At the time of writing, the EUR was down 0.01% to $1.03255. The EUR/USD fell to a low of $1.03246 before steadying.

Technical Indicators

The EUR/USD needs to avoid the $1.0319 pivot to target the First Major Resistance Level (R1) at $1.0366. Economic data would need to be EUR/USD positive to support a breakout from the Monday high of $1.03586.

In the case of an extended rally, the bulls will likely take a run at the Second Major Resistance Level (R2) at $1.0406 and $1.0450. The Third Major Resistance Level (R3) sits at $1.0493.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0279 into play. However, barring a risk-off-fueled sell-off, the EUR/USD pair should avoid sub-$1.02. The Second Major Support Level (S2) at $1.0232 should limit the downside.

The third Major Support Level (S3) sits at $1.0144.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 50-day EMA ($1.01102). 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 the Major Support Levels and the 50-day EMA ($1.01102) would support a breakout from R1 ($1.036) to bring R2 ($1.0406) and $1.0450 into view. However, a fall through S1 ($1.0279) would bring S2 ($1.0232).

Barring a flight to safety, the EUR/USD should avoid S3 ($1.0144) and the 50-day EMA ($1.01102) into play. The 200-day EMA sits at $0.99546.

The US Session

It is a busier day ahead on the US economic calendar, with wholesale inflation and NY Empire State Manufacturing numbers in focus. We expect the wholesale inflation figures to have more influence.

Following last week’s CPI report, a spike in wholesale inflation could bring into question the market’s bets of the December Fed pivot.

With the probability of a 75-basis point December rate hike sliding to 19.4%, hawkish Fed chatter could catch the markets by surprise. FOMC member Barr and Fed Governor Cook speak today.

On Sunday, FOMC member Christopher Waller reportedly said that the market focus should be on the “endpoint” of rate hikes and not the pace adding that the Fed is ‘a ways off’ the endpoint.