ANALYSIS EUR/USD
- EZ consumer confidence and sentiment data did not provide any market-moving info with EUR/USD largely unchanged.
- The focus now shifts to German CPI and EZ CPI, respectively.
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EURO FUNDAMENTAL BACKDROP
Eurozone consumer confidence in November was as expected (see the economic calendar below), but signs of an industrial slowdown were seen after actual data exceeded estimates. This could be related to both global recessionary fears as well as the Chinese influence on demand-side variables.
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EUR/USD ECONOMIC CALENDAR
Source: Economic calendar DailyFX
Yesterdays’ hawkish commentary from Fed officials as well as China’s ongoing COVID crisis did not hold today after China is said to have deescalated tensions giving a boost to the euro – EZ has strong ties to China which can expose the euro to weakness in the event of negative Chinese news. The ECB’s Christine Lagarde also mentioned that interest rate have a long way to go yesterday but today’s German inflation read could serve as a precursor to the eurozone CPI print tomorrow. The Spanish inflation expectations have been disappointed so far. If the EZ and German data follow the lead, the euro could see a decline in its currency against the greenback.
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TECHNICAL ANALYSIS
EUR/USD DAILY CHART
Prepared by Warren VenketasIG
The EUR/USD price movement showed little reaction to the consumer confidence release, but the emerging rising wedge pattern (black), may indicate impending downside. A rising wedge formation can be seen as a result of a prior downtrend. However, an uptrend could still produce similar results. The 200-day SMA, (blue), is another point of significance. Since the EUR/USD pair was unable to establish itself above this area of confluence, it has been difficult to maintain a significant uptrend. Yesterday’s long upper wick provides additional support for a consequent downturn.
Resistance levels
Support levels:
- 1.0369
- Wedge support
- 1.0198
IG CLIENT SENTIMENT DATA : MIXED
IGCS shows that retail traders are at the moment SHORT EUR/USD 54% As of the writing, there are currently a few traders who have short positions. DailyFX is known for its contrarian approach to crowd sentiment, but recent changes in short and long positioning have led us to favor a short-term cautious bias.
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