- A slow start to a busy week may see the dollar extending its gains.
- European data continues to reflect the tepid economic performance of the Union.
- EUR/USD nearing a critical support at 1.1065, bearish case stronger below it.
The American dollar has advanced slowly but steadily throughout the past week, ending it with gains against most major rivals. The EUR/USD pair closed Friday at 1.1079, in spite US data released at the end of the week didn’t back the greenback. In Europe, figures were mixed as the German IFO survey showed that business sentiment remained steady at 94.6 in October, better than an expected decline to 94.5, while the GFK Consumer Confidence Survey for November fell to 9.6 from 9.8 previously. The US released the final version of the Michigan Consumer Sentiment Index, down to 95.5 in October from a previous estimate of 96.0. The dismal sentiment that kept safe-haven strong was the result of persistent Brexit uncertainty, exacerbated by UK PM Johnson putting up the possibility of a snap election next December.
The week is set to start slowly in the data front, as the EU will release money data from September, while the US will offer September Goods Trade Balance, the Chicago Fed Activity Index, and October Dallas Fed Manufacturing Business Index. Later in the week, however, the US will publish the preliminary estimate of Q3 GDP, and the monthly Nonfarm Payroll employment report. In the middle, the US Federal Reserve will have a monetary policy meeting and is expected to cut rates by 25bps.
EUR/USD short-term technical outlook
The EUR/USD pair is trading a few pips above the 38.2% retracement of its latest rally, measured between 1.0878 and 1.1179 at 1.1065, the immediate support. In the daily chart, the pair has been unable to sustain gains above the 100 DMA, but it holds above a bullish 20 DMA, this last, converging with the 50% retracement of the mentioned rally. Technical indicators have retreated from overbought levels, heading firmly lower within positive ground, falling short of suggesting additional slides ahead. In the 4-hour chart, a bearish 20 SMA, caps advances around 1.1110, while technical indicators remain at weekly lows, lacking directional strength. A bearish extension will depend on whether the pair can break below the mentioned Fibonacci support, in which case, it could approach the 1.1000 figure.
Support levels: 1.1065 1.1030 1.1000
Resistance levels: 1.1110 1.1145 1.1180