{"id":5311,"date":"2023-11-01T04:02:36","date_gmt":"2023-11-01T04:02:36","guid":{"rendered":"https:\/\/connectwithfund.com\/news\/has-the-eur-usd-bottomed-out-undefinedeurusd\/"},"modified":"2023-11-01T04:02:37","modified_gmt":"2023-11-01T04:02:37","slug":"has-the-eur-usd-bottomed-out-undefinedeurusd","status":"publish","type":"post","link":"https:\/\/connectwithfund.com\/?p=5311","title":{"rendered":"Has The EUR\/USD Bottomed Out? (undefined:EUR:USD)"},"content":{"rendered":"<div data-test-id=\"content-container\">\n<p><figure class=\"getty-figure\" data-type=\"getty-image\"><picture>  <\/picture><figcaption> <\/figcaption><\/figure>\n<\/p>\n<p><em>By Fawad Razaqzada<\/em><\/p>\n<p><em>The EUR\/USD was up for the third consecutive day despite the release of even more disappointing Eurozone data.<\/em><\/p>\n<p>And unless it finishes today\u2019s session back below 1.0570, some 100 pips from the current levels, the EUR\/USD<span class=\"paywall-full-content invisible\"> would also finish the month on a high, preventing a hat trick of negative months. So, has the EUR\/USD bottomed out?<\/span><\/p>\n<h2 class=\"paywall-full-content invisible\"><strong>Euro Strong Across the Board<\/strong><\/h2>\n<p class=\"paywall-full-content invisible\">Notably, the euro was also higher on the month against nearly all her major rivals, including the GBP, JPY, and CAD, as well as the antipodean and Scandinavian currencies.<\/p>\n<p class=\"paywall-full-content invisible\">The EUR\/GBP was on course to finish higher for the second month, while the EUR\/JPY had crossed the 160.00 handle for the first time since August 2008 following the BoJ\u2019s slight tweak of its policy overnight in a decision that left markets disappointed.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">The only exception has been the EUR\/CHF, which was still negative on the month at the time of writing. But even this FX cross has been showing relative strength in the last couple of weeks.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">In other words, the euro has been showing surprising resilience in the face of all the doom and gloom about the eurozone economy and ongoing geopolitical risks. What doesn\u2019t break you makes you stronger. When markets rise on bad news, one can only assume that most of the pessimism is already priced in.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Indeed, today\u2019s publication of eurozone data showed the single currency bloc contracted in Q3 while inflation slowed down further in October, with both macro pointers coming in weaker than expected. German retail sales also disappointed expectations.<\/p>\n<ul class=\"paywall-full-content invisible no-summary-bullets\">\n<li>CPI Inflation YoY (Oct): 2.9%, down from 4.3% (3.1% exp)<\/li>\n<li>Core Inflation YoY (Oct): 4.2%, down from 4.5% (4.2% exp)<\/li>\n<li>Eurozone Q3 GDP: -0.1% vs. 0.1% in Q2 (0% exp)<\/li>\n<li>German Retail Sales -0.8% m\/m vs. +0.5% expected and -1.1% last<\/li>\n<\/ul>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\"><strong>Dollar Shows Signs of Weakness Ahead of a Busy Week<\/strong><\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Part of the reason behind the EUR\/USD\u2019s recent strength can be explained away by the dollar showing signs of fatigue against most major currencies (except the JPY perhaps).<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">After topping out at $1.1275 in July, the euro has shed over 8,00 pips at its lowest point in early October of just below 1.0450. That 7% decline was mainly in response to the sharp repricing of \u201chigher for longer\u201d US interest rates narrative, and the further deterioration we saw in Eurozone data.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">But the further resilience of US data we have seen over the past couple of weeks hasn\u2019t led to any further appreciation in interest rate expectations, keeping the dollar in consolidation mode.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">The EUR\/USD has managed to cling on to key support in the 1.05-1.06 area as a result. So, there is a possibility we may see some strength come back into the EUR\/USD, especially if this week\u2019s US data turns out to be weaker than expected.<\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\"><strong>FOMC is likely to signal high rates will stay for a long time<\/strong><\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">The Fed has kept the door to one more rate hike open. But the market seems convinced there will be no more hikes, certainly not at Wednesday\u2019s meeting. The probability of a hike in the next meeting in December was around 20% last week.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Those odds could increase or decrease sharply depending on how hawkish or otherwise the Fed is going to be this week. But a lot will also depend on incoming data. We have seen plenty of forecasting-beating US data of late.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Last week saw the UoM\u2019s consumer sentiment, pending and new home sales, GDP, and both manufacturing and services PMIs all come in ahead of expectations. The week before, it was retail sales, industrial production, and jobless claims data that topped expectations.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">So, the US economy is showing continued resilience in the face of high interest rates, putting the Fed in a slightly difficult position as to whether it should tighten its belt even further, or just keep rates at these current levels for a longer-than-expected period.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">A growing number of analysts and economists seem to agree with the latter approach. Let\u2019s see if this is something that the Fed alludes to at this meeting.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">One reason why the Fed is unlikely to raise rates again is the recent rise in long-term bond yields, which effectively is equivalent to a couple of additional rate hikes. This is all in the price.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Forward-looking investors are perhaps thinking that if interest rates stay high, the eventual rate-cutting cycle that will inevitably follow will be more pronounced than would otherwise be the case. That may explain why the EUR\/USD is showing some signs of life.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">But let\u2019s not get too ahead of ourselves yet and a lot can change both in the Eurozone and the US in the next couple of months. Let\u2019s see whether and how the trend of the US data will evolve, starting with the monthly jobs report that is due on the economic calendar on Friday.<\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\"><strong>US NFP and ISM Services PMI Among Key US Data Highlights<\/strong><\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">The \u201chigher for longer\u201d narrative will be put to the test again later in the week with Friday\u2019s release of the October US jobs report and the ISM services PMI data that would be released later in the day.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">With the Fed meeting taking place in mid-week, the US dollar should be in for a roller-coaster ride. But with the dollar moving sharply higher in the last three months or so, most of the positivity may be priced in.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">For the dollar to accelerate from here, it will take a lot more effort. Put another way, if upcoming US data were to disappoint, the US dollar\u2019s downside reaction may well be more pronounced than would otherwise be the case.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\"><strong>EUR\/USD Technical Analysis<\/strong><\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"regular-img-figure paywall-full-content invisible\" contenteditable=\"false\"><picture> <img decoding=\"async\" src=\"https:\/\/connectwithfund.com\/wp-content\/uploads\/2023\/11\/saupload_tradingidea61856.png\" alt=\"EUR\/USD Technical Analysis\" contenteditable=\"false\" loading=\"lazy\"> <\/picture><figcaption><\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Source: TradingView.com<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Let\u2019s see if this week\u2019s key macro events from the US will change the direction of the trend again. But if we put our trust in technical analysis alone, then one can argue the EUR\/USD has potentially bottomed out in light of the recent price action.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">That\u2019s because the EUR\/USD has broken its bearish trend line that had been in place since July, when the dollar bottomed out.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">This break of the trend line and the fact that rates have moved above the short-term 21-day exponential moving average means the path of least resistance is no longer to the downside.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">What\u2019s more, the EUR\/USD looks set to close higher on the month, with other euro crosses also looking strong across the board.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">The key level to watch this week is around 1.0635, which was the low in May. We broke below this level in September, and the retest of it from underneath was held twice earlier in the month.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">But the EUR\/USD is now finding itself above this pivotal level again. If we continue to see acceptance above this level, then look out for a short squeeze rally, while a move back below it would complicate the technical picture again.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\"><em>Originally published on MoneyShow.com<\/em><\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\"><strong>Editor&#8217;s Note:<\/strong> The summary bullets for this article were chosen by Seeking Alpha editors.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/seekingalpha.com\/article\/4645691-has-the-eurusd-bottomed-out?source=feed_all_articles\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Fawad Razaqzada The EUR\/USD was up for the third consecutive day despite the release of even more disappointing Eurozone data. And unless it finishes today\u2019s session back below 1.0570, some 100 pips from the current levels, the EUR\/USD would also finish the month on a high, preventing a hat trick of negative months. So, has the EUR\/USD bottomed out? Euro Strong Across the Board Notably, the euro was also higher on the month against nearly all her major rivals, including the GBP, JPY, and CAD, as well as the antipodean and Scandinavian currencies. The EUR\/GBP was on course to<\/p>\n","protected":false},"author":1,"featured_media":5312,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[42],"tags":[],"class_list":["post-5311","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Has The EUR\/USD Bottomed Out? 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