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EURUSD Consolidation at Local Highs

10/19/2022 10:39 AM

The European currency shows mixed dynamics, consolidating near 0.9840 and local highs from October 6. Traders are once again in no hurry to open new positions against the backdrop of some stabilization of the market situation. In particular, analysts pay attention to the easing of energy risks for Europe as prices for "blue fuel" and oil decrease, while the volume of supplies of liquefied natural gas increases. In addition, pressure from the dollar is gradually easing, as the US Federal Reserve increasingly mentions the possibility of slowing down the pace of interest rate hikes in the near future.

Macroeconomic statistics from Europe published yesterday did not have a noticeable impact on the instrument's dynamics. The index for Current Situation in Germany in October from the Center for European Economic Research (ZEW) showed a sharp decline from -60.5 points to -72.2 points, which turned out to be worse than market expectations of a fall to -68.0 points. At the same time, the index of Economic Sentiment in Germany from ZEW for the same period adjusted slightly from -61.9 points to -59.2 points, while forecasts suggested a further decline to -65.7 points. In the eurozone, the ZEW survey reflected a correction in the index of Economic Sentiment in October from -60.7 points to -59.7 points, while the forecast was -60.6 points.

The President of the European Central Bank (ECB), Christine Lagarde, speaking at a meeting of the International Monetary Fund (IMF) predicted a "significant slowdown" in the region's economy in the second half of this year, the catalyst for which will be rapid inflation and reduced international demand. In addition, the official confirmed the continued tightening of monetary stimulus over the next few meetings of the regulator to slow down inflation, which now stands at 10.0%. The "hawks" hope to begin a gradual reduction in the amount of assets on the ECB's balance sheet in early 2023 (now valued at 5.1 trillion euros) by not reinvesting the proceeds from redeemable papers, rather than by selling bonds.

On the D1 chart, Bollinger Bands are gradually reversing horizontally. The price range is slightly changing, being spacious enough for the current activity level in the market. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic retains a steady uptrend, but is located in close proximity to its highs, which points to the risk of overbought euro in the ultra-short term.

Resistance levels: 0.9900, 0.9950, 1.0000, 1.0050. | Support levels: 0.9850, 0.9800, 0.9750, 0.9666.

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