The EUR/USD pair has been actively gaining value for the second week and is currently trading around 1.0400. At the same time, the upward dynamics are facilitated not only by the immediate strengthening of the euro but by the correction of the US currency after the October data on inflation in the US, which recorded a significant slowdown.
Thus, the consumer price index decreased from 8.2% to 7.7% YoY, and the producer price index – from 8.4% to 8.0% YoY. Statistics strengthened hopes for a slowdown in the tightening of monetary stimulus by the US Federal Reserve and returned the interest of traders to more risky assets. It should be noted that officials of the American regulator are generally trying to prevent excessive optimism in the market. The October price slowdown is not yet the final victory over inflation, and the interest rate ceiling may be even higher than previously expected. Nevertheless, the weakening of the American currency continues.
On the other hand, the upward dynamics of the euro are also supported by the latest statistics, which, although the EU economy is preparing for a recession, was better than experts expected: industrial production in September added 0.9% against preliminary estimates of 0.3%, and the German economic sentiment index from the Center for European Economic Research (ZEW) corrected from –59.2 points to –36.7 points in November, while Q3 gross domestic product (GDP) rose by 0.2%. The European economy looks more resilient than expected, although the risks of a slowdown increase and a recession may still come in the fourth quarter. Today investors expect October data on inflation. The consumer price index is forecast to rise from 1.2% to 1.5% MoM and from 9.9% to 10.7% YoY. Implementation of forecasts or higher inflationary growth may lead to a temporary weakening of the position of the euro.
Technically, the price rose above 1.0376 (Murrey [5/8]) and may continue rising to 1.0498 (Murrey [6/8]) and 1.0620 (Murrey [7/8]), signaling a continuation of the short-term uptrend, which is also confirmed by upward reversal of Bollinger bands and an increase in the MACD histogram in the positive zone. Nevertheless, Stochastic is getting ready to leave the overbought area, not excluding the instrument's decline to the area of 1.0253 (Murrey [4/8]), 1.0131 (Murrey [3/8]).
Resistance levels: 1.0498, 1.0620. | Support levels: 1.0376, 1.0253, 1.0131.