The EUR/USD’s breach of 1.1310 resulted in significant selling above the mark before reversing from 1.1270. This level is now acting as a hold, but Scotiabank analysts believe the pair will go below it. Throughout the day, the 1.1270 level will serve as support, while oversold circumstances may restrict losses.
The EUR/USD might see buying activity fall underneath the figure, but a significant negative trend should see the cross close beneath the level shortly, and there are no noteworthy support markers other than the large figure regions.
Sellers continued to dominate the EUR/USD, dragging it to a new 16-month low at 1.1260 early on Wednesday. In the short term, the continuation of the downturn looks more likely.
A break of the YTD low of 1.1263 (November 17) should strive for a decline to the July 2020 low of 1.1185 ahead of 1.1168. (low June 19, 2020). Meanwhile, additional losses are possible as long as the cross trades underneath the next resistance level (off September’s high) today at 1.1610.
In the long term, the bearish picture remains as the price is below the 200-day SMA, which is now at 1.1865.
In-Depth Analysis Of The Fundamentals And Technicalities
EUR/USD CHART Source: Tradingview.com
Despite the EUR/USD’s recent rebound effort, the descending decline pattern that began on November 9 remains intact. The four-hour chart’s Relative Strength Index (RSI) signal appears to have lost momentum after hitting 30, indicating that buyers are still unwilling to commit to a more definitive rally.
On the upside, the initial barrier is 1.1340 (the top limit of the declining channel).
If the pair closes above that level daily, it might target the 1.1370/80 region (static level, previous support, 20-period SMA) and 1.1400. (psychological level). There are supports around 1.1300 (psychological level), 1.1260 (16-month low), and 1.1200. (psychological level).
In the Asian session on Wednesday, the EUR/USD dropped to its weakest since July 2020 at 1.1263 but recovered to reverse its daily losses prior to the American session. In the absence of high-level macroeconomic information releases and fundamental factors, technical levels may assist investors in determining the pair’s future short-term direction.
Eurostat statistics earlier in the day indicated that annual inflation in the Eurozone, as assessed by the Consumer Price Index (CPI), was 4.1% in October. This number was in line with the flash assessment and the market assumption, but it did not cause a noteworthy market reaction.
The European Central Bank observed in its Financial Stability Assessment that better economic circumstances have decreased near-term tail risks to Eurozone financial stability. Nonetheless, this article received little to no notice from market players.
Conversely, the 10-year US Treasury note yield is trading flat on Wednesday, a little around 1.65%, making it tough for the US currency to continue to beat its rivals.
Nevertheless, there has been a rise in US T-bond rates during American market hours since the start of the week. A comparable market reaction might strengthen the Greenback and limit the EUR/USD’s recovery.
Investors will also be paying careful attention to Fedspeak, as hawkish remarks are expected to enable the market to continue pricing in Fed rate rise prospects and raise rates.