EUR/USD Rebounds as Treasury Yields Shift Lower

The Euro is trading higher on Thursday after recovering from an early attempt to weaken it failed to attract enough sellers to continue the move.

The intraday reversal comes as a surprise since U.S. Treasury yields were edging higher with the benchmark U.S. 10-year Treasury yield testing a 14-year lower early today.

The move suggests investors may already be squaring positions ahead of a widely expected 75-basis point rate hike by the European Central Bank on October 27.

According to reports, a 75bp rate hike looks like a done deal but it may not be enough to stop the single currency from dropping further since the U.S. Federal Reserve is expected to match this move with its own 75bp rate hike on November 2.

At 12:01 GMT, the EUR/USD is trading .9814, up 0.0041 or +0.42%. On Wednesday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $90.18, up $0.79 or +0.87%.

US Economic Data Could Set Tone into Close

Starting at 14:30 GMT, the U.S. is scheduled to release a number of economic reports including the all-important Philly Fed Manufacturing Index. It is expected to come in at -5.0, an improvement from the previous month’s -9.9 reading.

Weekly Unemployment Claims and Existing Home Sales will also be closely watched. The former is expected to show 229K Americans filed for unemployment benefits last week, up slightly from 229K. Existing Home Sales are expected to have fallen to 4.69M units from 4.80M units.

Several Fed speakers are also on tap from 17:30 GMT to 18:05 GMT including Fed Governor Philip Jefferson, Fed Governor Cook and Fed Governor Michelle Bowman. They could pressure the EUR/USD if they come across as hawkish.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .9876 will change the main trend to up. A move through .9632 will signal a resumption of the downtrend.

The short-term range is .9537 to .9999. The EUR/USD found support earlier in the session inside its retracement zone at .9768 to .9714.

On the upside, the nearest resistance is a price cluster at .9868 to .9876. If the main trend changes to up then the pivot at .9952 will become the next target level.

Daily Swing Chart Technical Forecast

Trader reaction to a new minor pivot at .9815 is likely to determine the direction of the EUR/USD into the close on Thursday.

Bullish Scenario

A sustained move over .9816 will indicate the presence of buyers. If this move creates enough upside momentum, we could see a late session surge into the resistance cluster at .9868 to .9876.

Bearish Scenario

A sustained move under .9815 will signal the presence of sellers. If this generates enough downside momentum then look for a break into the short-term 50% level at .9768, followed by a retest of .9755.

The key support level is the Fibonacci price at .9714. Buyers could come in on the first test of this level, but if it fails then look for a possible acceleration to the downside.