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The European Currency Retreated from its Local Highs

11/16/2022 12:04 PM

The European currency shows mixed trading dynamics, consolidating near 1.0350. The day before, the EUR/USD pair showed quite active growth and even managed to update local highs from July 1; however, the instrument failed to consolidate at new levels.

The positions of the US currency strengthened noticeably during the evening session in response to reports of the fall of two missiles in Poland. So far, there is still no complete information; however, the country has announced that it is increasing the combat readiness of a number of military units and special services, and the leaders of the G7 and the North Atlantic Alliance issued a joint statement in which they confirmed their full support for the ongoing investigation by Poland. Traders fear that this could serve as an additional escalation of the Russian-Ukrainian military conflict.

Meanwhile, investors are taking a lead from yesterday's macroeconomic statistics. Gross Domestic Product (GDP) of the eurozone in the third quarter (according to the reassessment) did not change and amounted to 0.2% in quarterly terms and 2.1% in annual terms. At the same time, the Employment Change in the region slowed down from 0.4% to 0.2% in the third quarter, which was slightly worse than market expectations at 0.3%. In annual terms, the indicator fell from 2.7% to 1.7%, also falling below the projected 1.8%.

In turn, data from a study by the Center for European Economic Research (ZEW) turned out to be positive: eurozone's Economic Sentiment index rose from -59.7 points to -38.7 points in November, while analysts expected a fall to -67.0 points, and the German Economic Sentiment index strengthened from -59.2 points to -36.7 points, which also turned out to be better than forecasts at the level of -50.0 points.

Bollinger Bands on the daily chart show a steady increase. The price range is expanding but it fails to conform to the "bullish" activity at the moment. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic, being at its highs, maintains its downtrend, signaling in favor of the development of a correctional decline in the near future.

Resistance levels: 1.0400, 1.0450, 1.0500, 1.0550. | Support levels: 1.0350, 1.0300, 1.0253, 1.0200.

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