EUR/USD Weakening as Downside Momentum Increases Following Monday’s Reversal Top

The Euro is under pressure against the U.S. Dollar late Tuesday as traders reacted to a sudden intraday jump in Treasury yields ahead of Wednesday afternoon’s speech by Federal Reserve Chairman Jerome Powell.

He is expected to deliver a speech at the Hutchins Center on Fiscal and Monetary Policy at Brookings. Investors will be looking for clues as to whether the central bank will slow or stop interest rate hikes in the near future.

At 20:08 GMT, the EUR/USD is trading 1.0325, down 0.0016 or -0.15%. The Invesco CurrencyShares Euro Trust ETF (FXE) is at $95.22, down $0.13 or -0.14%.

Domestic News

In economic news, domestically, Euro Zone economic sentiment rebounded in November slightly more than expected, data showed on Tuesday, rising for the first time since the Russian invasion of Ukraine in February on more optimism among consumers and in services.

The European Commission said its economic sentiment indicator rose to 93.7 in November from 92.7 in October, marginally beating consensus estimates in a Reuters poll of economists of a rise to 93.5.

Additionally, data on Tuesday showed price pressures in Spain and Germany were easing considerably, while a separate survey said inflation expectations among consumers and business in the Euro Zone fell sharply in November from October.

US News

U.S. single-family home prices slowed further in September as higher mortgage rates eroded demand. The S&P CoreLogic Case Shiller national home price index dropped 0.8% month-over-month in September.

In other news, the Conference Board’s Leading Index came in at 100.2, slight above the 100.00 forecast, but 2% lower than the previous reading of 102.2.

Short-Term Outlook

The main trend is up according to the daily swing chart. However, momentum is trending lower following the confirmation of yesterday’s closing price reversal top.

A trade through 1.0497 will signal a resumption of the uptrend. A move through .9730 will change the main trend to down.

The minor trend is also up. A trade through 1.0223 will change the minor trend to down. This will confirm the shift in momentum.

Look for the downside bias to continue into the close on Tuesday on a sustained move under 1.0366. The nearest downside target is a support cluster at 1.0223 – 1.0216.