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The Euro (EUR) manages to generate some upside traction against the US Dollar (USD), motivating EUR/USD to attempt a tepid bounce to the 1.0860 zone on Thursday.

The Greenback alternates gains with losses around 104.40 when tracked by the USD Index (DXY) amidst declining US yields across the board and firmer market chatter around the start of interest rate cuts by the Federal Reserve (Fed) at some point in the summer of 2024.

Speculation about potential Fed rate cuts has been magnified following weaker-than-estimated inflation measures (CPI and PPI) published earlier in the week.

There is no macro data in the domestic calendar, but ECB President Lagarde will speak at an event in Frankfurt.

Across the ocean, weekly Initial Jobless Claims are due along with the Philly Fed Manufacturing Index, Industrial Production, and the NAHB Housing Market Index.

Daily digest market movers: Euro picks up pace as Dollar deflates   

• The EUR regains upside impulse against the USD.
• US and German yields trade on the defensive on Thursday.
• Market participants speculate that the Fed could cut rates in H1 2024.
• Investors favour a protracted pause by the ECB.
• Rumours of FX intervention keep gyrating around USD/JPY.
• ECB’s Andrea Enria, Luis De Guindos and Christine Lagarde speak later.
• US weekly Initial Claims and Philly Fed index take centre stage.
• Australia saw a strong labour market report in October.

Technical Analysis: Euro looks at potential test of 1.0945

EUR/USD advances modestly on Thursday, returning at the same time to the upper end of the recent range.

The November peak of 1.0887 (November 14) emerges as the next target of note for EUR/USD prior to the weekly high of 1.0945 (August 30) and the psychological level of 1.1000. The breakout of this area might pave the way for a visit to the August top of 1.1064 (August 10) and another weekly peak of 1.1149 (July 27), all preceding the 2023 high of 1.1275 (July 18).

Occasional bouts of weakness may cause the pair to test temporary support at the 55-day Simple Moving Average (SMA) at 1.0639, before the weekly low of 1.0495 (October 13) and the 2023 low of 1.0448. (October 15).

Looking at the bigger picture, the pair's outlook should continue positive as long as it remains above the 200-day SMA at 1.0803.

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