During Thursday’s Asian session, the EUR/USD price rose slightly. However, the pair dropped nearly 100 pips in one day overnight, then trading in a narrow range of 15 pips just ahead of the European session.
The EUR/USD pair is currently trading at 1.1601 at writing, up 0.04% on the day.
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Despite the dollar’s initial gains, the US Dollar Index (DXY) detracts some of its gains. Nevertheless, it seems even higher than 94.20, which continues to cap the EUR/USD gains.
The EUR/USD price slipped below 1.1600 due to strong US dollar buying, its lowest since July 2020. As the Fed prepares to cut its economic stimulus program and raise interest rates, investors continue to put their money in the dollar.
The US dollar has also fueled fears among the heads of major central banks, including the Fed, the ECB, and the BoE, about inflation and growth. For example, At the ECB forum, Federal Reserve Chairman Jerome Powell said that it is difficult for the central bank to balance high inflation and high unemployment.
Meanwhile, traders remained cautious about the deadline for avoiding Thursday’s US government shutdown. Senate Chairman Schumer is still preparing to vote on a preliminary budget bill through December 3.
The single currency, however, remained depressed amid divergences in ECB and Fed’s position on tightening. According to Christine Lagarde, president of the European Central Bank, it would be unwise to overreact to temporary supply shocks.
Among economic data, eurozone consumer confidence slightly gained from -5.3 in August to -4.0 in September, while optimism for services declined from 16.8 to 15.1 in September.
To gain fresh momentum for trading, the market participants are awaiting US Gross Domestic Product (GDP) results, the German unemployment rate, the eurozone unemployment rate, and the Harmonized Index of Consumer Prices.
EUR/USD Price Technical Analysis:
(Click on image to enlarge)
The EUR/USD price remains on the backfoot, sliding below the 1.1600 handle. The average daily range is 26%, showing very low volatility in the market. Right now, the price is testing November 04, 2020, lows at 1.1597. The next support levels come at 1.1560 ahead of 1.1525 and then 1.1492. On the upside, resistance levels lie at 1.1660, followed by 1.1700 and then 1.1755.
We may expect a slight boost from the current levels amid strong support at 1.1600 and expected profit-taking as well, but the overall scenario remains bearish.
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