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EUR/USD ANALYSIS
- EZ consumer sentiment and confidence data did not provide any market moving information with EUR/USD largely unchanged.
- Attention now shifts towards German and EZ CPI respectively.
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EURO FUNDAMENTAL BACKDROP
Eurozone consumer confidence for November printed as expected (see economic calendar below) but signs of an industrial slowdown was shown after actual data missed estimates. This could be linked to the Chinese impact on demand-side factors as well as global recessionary fears.
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Source: DailyFX economic calendar
Yesterdays’ hawkish commentary from Fed officials as well as China’s ongoing COVID crisis did not hold today after China is said to have deescalated tensions giving a boost to the euro – EZ has strong ties to China which can expose the euro to weakness in the event of negative Chinese news. The ECB’s Christine Lagarde also mentioned that interest rate have a long way to go yesterday but today’s German inflation read could serve as a precursor to the eurozone CPI print tomorrow. Thus far, Spanish inflation has missed expectations and should German and EZ data follow suit, the euro could be heading for a turn lower against the greenback.
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TECHNICAL ANALYSIS
EUR/USD DAILY CHART
Chart prepared by Warren Venketas, IG
EUR/USD price action showed little signs of reaction to the consumer confidence release but the developing rising wedge pattern (black) may suggest impending downside to come. Although the rising wedge formation is typically seen via a prior downtrend, an uptrend can still produce similar results. The 200-day SMA (blue) is also a point of significant as the EUR/USD pair has been unable to cement itself above this key area of confluence. Yesterday’s long upper wick provides additional support for a consequent downturn.
Resistance levels:
Support levels:
- 1.0369
- Wedge support
- 1.0198
IG CLIENT SENTIMENT DATA: MIXED
IGCS shows retail traders are currently SHORT on EUR/USD, with 54% of traders currently holding short positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment but due to recent changes in long and short positioning, we favor a short-term cautious bias.
Contact and followWarrenon Twitter:@WVenketas
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