Inflation in the Eurozone fell to 2.9% in October (year-on-year), compared to the forecast of 3.1% and September’s 4.3%. Likewise, the core inflation in October in the Eurozone also declined to 4.2% from 4.5% in September. According to recently published data, the Eurozone’s GDP contracted by -0.1% in the third quarter (compared to an expected zero growth and a modest +0.1% in the second quarter).
Against this backdrop (slowing inflation and economic activity in the Eurozone), the voices of economists who believe that the ECB has completed its cycle of interest rate hikes are becoming louder. All of this is a negative factor for the euro and the EUR/USD pair.
The refined PMI business activity indices (according to S&P Global) for Germany and the Eurozone, published on Monday, confirmed the continued slowdown in economic activity in the region.
Less convincing data from Europe, which showed that industrial production in Germany contracted by -1.4% in September (-3.7% year-on-year), significantly more than the previous decline in August, and data on the dynamics of manufacturing inflation in the Eurozone reflected a slowdown in the year-on-year figure to -12.4% in September from -11.5% in August, added extra pressure on the euro.
After these publications, the euro remained relatively stable in major currency pairs but started to decline against the U.S. dollar.
EUR/USD failed to develop an upward correction above the key resistance level of 1.0735 (200 EMA on the daily chart), which it tested on the breakout last Friday.
Today, the pair resumed its decline. Short positions remain preferable in the main scenario. A consecutive breakdown of the support levels at 1.0655 (50 EMA on the daily chart), 1.0641 (200 EMA on the 1-hour chart), and 1.0625 (200 EMA on the 4-hour chart) will be a confirming signal.
In this case, the nearest target for the decline will be the local support level of 1.0530.
In an alternative scenario, a rebound will occur from the support levels of 1.0655 and 1.0641, and EUR/USD will once again head towards the key resistance level of 1.0735. Below this level, the pair remains in the medium-term bearish territory.
However, only a breakout of the key resistance level at 1.1020 (200 EMA on the weekly chart) will return the pair to the long-term bullish territory.
For now, as noted above, short positions remain preferable.
Support levels: 1.0655, 1.0641, 1.0625, 1.0600, 1.0530, 1.0500, 1.0448, 1.0400
Inflation in the Eurozone fell to 2.9% in October (year-on-year), compared to the forecast of 3.1% and September’s 4.3%. Likewise, the core inflation in October in the Eurozone also declined to 4.2% from 4.5% in September. According to recently published data, the Eurozone’s GDP contracted by -0.1% in the third quarter (compared to an expected zero growth and a modest +0.1% in the second quarter).
Against this backdrop (slowing inflation and economic activity in the Eurozone), the voices of economists who believe that the ECB has completed its cycle of interest rate hikes are becoming louder. All of this is a negative factor for the euro and the EUR/USD pair.
The refined PMI business activity indices (according to S&P Global) for Germany and the Eurozone, published on Monday, confirmed the continued slowdown in economic activity in the region.
Less convincing data from Europe, which showed that industrial production in Germany contracted by -1.4% in September (-3.7% year-on-year), significantly more than the previous decline in August, and data on the dynamics of manufacturing inflation in the Eurozone reflected a slowdown in the year-on-year figure to -12.4% in September from -11.5% in August, added extra pressure on the euro.
After these publications, the euro remained relatively stable in major currency pairs but started to decline against the U.S. dollar.
EUR/USD failed to develop an upward correction above the key resistance level of 1.0735 (200 EMA on the daily chart), which it tested on the breakout last Friday.
Today, the pair resumed its decline. Short positions remain preferable in the main scenario. A consecutive breakdown of the support levels at 1.0655 (50 EMA on the daily chart), 1.0641 (200 EMA on the 1-hour chart), and 1.0625 (200 EMA on the 4-hour chart) will be a confirming signal.
In this case, the nearest target for the decline will be the local support level of 1.0530.
In an alternative scenario, a rebound will occur from the support levels of 1.0655 and 1.0641, and EUR/USD will once again head towards the key resistance level of 1.0735. Below this level, the pair remains in the medium-term bearish territory.
However, only a breakout of the key resistance level at 1.1020 (200 EMA on the weekly chart) will return the pair to the long-term bullish territory.
For now, as noted above, short positions remain preferable.
Support levels: 1.0655, 1.0641, 1.0625, 1.0600, 1.0530, 1.0500, 1.0448, 1.0400
Resistance levels: 1.0700, 1.0735, 1.0800, 1.0820, 1.0900, 1.0920, 1.1000, 1.1020, 1.1090, 1.1200, 1.1275, 1.1300, 1.1400, 1.1500, 1.1600
The material has been provided by InstaForex Company – www.instaforex.com