EUR/USD is Trading Around 1.1550, Bearish in the Near Term

EUR/USD Current price: 1.1555

• Tepid European data and broad dollar’s demand sent EUR/USD towards its year low.
• US Treasury yields retreated amid central bankers disregarding inflationary pressures.
• EUR/USD is trading around 1.1550, bearish in the near term.

The EUR/USD pair traded as low as 1.1527, flirting with its 2021 low amid the broad dollar’s strength. The pair came under selling pressure after yet another failed attempt of recovering beyond 1.1615, a Fibonacci resistance level that capped advances ever since the week started.

US Treasury yields fell in the aftermath of the US Federal Reserve decision, as the central bank delivered as expected. Yields dragged the greenback lower alongside the Bank of England monetary policy decision, as UK policymakers refrained from changing rates or their facilities programs while policymakers poured cold water on inflationary pressures. The yield on the 10-year US Treasury note is currently at 1.53%, retreating from an intraday peak of 1.60%.

Data wise, German Factory Orders in September advanced 1.3% MoM, missing expectations, while the annual reading printed at 9.7%, below the previous 11.7%. On the other hand, producer prices kept rising in the EU as the September PPI jumped to 2.7% MoM and 16% YoY. Additionally, Markit published the final readings of the October Services PMIs. The German index was confirmed at 52.4,  although the EU one was downwardly revised to 54.6.

The US published the September Goods Trade Balance, which posted a deficit of $-80.934 billion, and Initial Jobless Claims for the week ended October 29, which contracted to 269K, beating expectations.   

On Friday, Germany will release September Industrial Production, while the EU will unveil Retail Sales for the same month. The event of the day will be the US Nonfarm Payrolls report. The country is expected to have added 425K new jobs in October, while the unemployment rate is foreseen down to 4.7% as the participation rate is expected to remain steady at 61.6%.

EUR/USD short-term technical outlook

The pair trades around 1.1550, heading into the Asian opening with a firmly bearish technical stance. The daily chart shows that technical indicators head firmly lower within negative levels, as the price slides below a still flat 20 SMA. The longer moving averages maintain their bearish slopes well above the current level.

The near term picture also favors a bearish extension, as the pair is comfortably trading well below all of its moving averages, with the 20 SMA turning south below the longer ones. At the same time, the Momentum indicator heads firmly lower within negative levels, while the RSI consolidates around 40, all of which favors a bullish extension toward fresh yearly lows.

Support levels: 1.1520 1.1470 1.1430

Resistance levels: 1.1615 1.1670 1.1710