Euro Gropes For Foothold

The EURUSD pair dipped 0.24% to 1.1451 on Thursday, November 11. Trading saw sharp swings during the European session. Buyers attempted several times to msuter a rally, but were eventually forced to retreat to 1.1443.

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On Thursday, the US and Canada celebrated national holidays. The US debt market was offline. Market participants were still digesting the US inflation data released on November 10. The aussie and the kiwi dollars have lost 1.39% and 1.36% since the start of the week. This downtrend flags risk aversion.

Today’s macro agenda (GMT+3)

• 13:00 Eurozone: industrial production (September)
• 17:00 UK: BoE MPC member Jonathan Haskel speech
• 18:00 US: University of Michigan consumer sentiment and inflation expectations (November)
• 20:10 US: FOMC member Williams speech
• 21:00 US: Baker Hughes weekly oil rig count
• Eurozone: Economic and Financial Affairs Council meeting

Current outlook

By the time of writing, major currencies were showing mixed performance. The aussie and sterling entered positive territory. Other currencies have also been paring losses. There is a chance that the dollar could revert to a correction ahead of the weekend.

Technical analysis

On the daily timeframe, the DXY index has reached the resistance level, which formed from the tops of 93.19, 93.75 and 94.52. The index has exceeded the 94.33-94.79 zone, so we can expect DXY futures to show increased volatility. Buyers need to defend the 94.57 mark, otherwise major currencies will see a correction set in.

Technically, the DXY is eyeing 97.30. Western banks predict the single currency will drop to 1.10 (trendline from 0.8231) amid policy divergence between the ECB and the US Federal Reserve. The Fed is expected to raise rates, whereas the European regulator is expected to maintain an accommodative monetary policy stance until 2023.

The UST10Y yield is in decline. The AUDUSD and NZDUSD pairs are trying to rebound from earlier lows. Sellers will likely test the 1.1425 level before an upward correction. Given that price action has broken through the 50% level of growth from 1.0636 to 1.2350, the next target will be 1.1290 (61.2% Fibonacci retracement).