The single currency recovers fast from Thursday’s decline, which encourages the EUR/USD pair to recapture the 1.1640 level by the end of the week. The EUR/USD is being supported by data. On Friday, the EUR/USD regained upward momentum and returned to the 1.1650 level, boosted by the revival of selling momentum in the Dollar and an optimistic tone in the broader risk-linked market.
As a result of lower US rates, the Greenback has been weighed down once more. This caused the US Dollar Index (DXY) to retreat from its optimistic intents that were observed in the last session. Furthermore, the improved preliminary numbers for the Manufacturing PMI in both Germany and the rest of Europe for the current month are bolstering the pair’s strong tone.
Review Of The Technical Details
EUR/USD CHART Source: Tradingview.com
The Relative Strength Index (RSI) signal on the four-hour graph is drifting horizontally a bit above 50, reflecting EUR/USD’s indecision in the short term. On the negative, the first level of support is at 1.1620 (Fibonacci 23.6% retracement of the September downturn). A daily closure under that mark could pave the way for another leg downward, possibly approaching 1.1600 (psychological level, 100-period SMA) and 1.1560. (static level).
As previously stated, 1.1670 (Fibonacci 38.2 percent retracement, 200-period SMA) serves as a key barrier. With a clear breach above that barrier, 1.1700 (psychological tier) and 1.1720 (Fibonacci 50 percent retracement) might be targeted.
Review Of The Fundamentals
The EUR/USD duo has lost momentum for the second time this week after rising to the 1.1670 region, emphasizing the significance of this milestone in the short term. Although the duo is still trading in the top part of its weekly band, it is unlikely to attract investors unless it breaks over that barrier. In the absence of significant macroeconomic statistics updates, market sentiment offers a directional cue through influencing the market capitalization of the US dollar.
Reports of Evergrange completing a $83.5 million bond interest charge, as well as anticipation for a resolution on US President Biden’s expenditure agenda, keep risk flows alive in advance of the weekend. After halting a six-day losing skid on Thursday, the US Dollar Index is failing to gain traction. Furthermore, the benchmark 10-year US Treasury bond yield fell by more than 1% on Friday, placing additional pressure on Greenback’s shoulders.
Furthermore, statistics from Germany revealed on Friday that private sector company operations grew at a slow pace in early October, with the Markit Composite PMI falling to 52 from 55.5 in Sept. Likewise, the eurozone Composite PMI fell to 54.3 off 56.2. Later in the day, Markit Manufacturing PMI statistics from the United States will be scrutinized for new momentum.
More significantly, at 1500 GMT, FOMC Chairman Jerome Powell will make a speech. The Fed will enter a quiet zone on Saturday, Oct 23, and this would be Powell’s final opportunity to send a message to investors before the next meeting is held. Nonetheless, the EUR/USD is likely to stay restricted to technical levels as market players look for the next major trigger.