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Euro regains the smile and surpasses 1.0700, looks at ECB Lagarde.

November 9, 2023

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The Euro now appears bid against the US Dollar.European equities exepcted to end Thursday’s session with gains.Fed’s Powell, ECB’s Lagarde take centre stage later in the session.

The Euro (EUR) now manages to regain some composure against the US Dollar (USD), encouraging EUR/USD to pierce the key barrier at 1.0700 the figure on Thursday.

In the meantime, the Greenback abandons the area of daily highs near 105.70 when tracked by the USD Index (DXY) on the back of vacillating risk appetite trends and rising prudence prior to Federal Reserve (Fed) Chair Jerome Powell’s event later in the European evening.

In terms of monetary policy, there is an increasing consensus among market participants that the Fed is likely to maintain its present monetary stance unchanged in the next few months. The possibility of an interest rate hike in December has lost some momentum, particularly following the recent FOMC meeting and the publication of weaker-than-expected Nonfarm Payrolls data for October.

A similar sentiment can be observed regarding the European Central Bank (ECB), although the recent hawkish narrative from some rate setters seems to have left the door open to further tightening in the short-to-medium term.

In the domestic calendar, President Christine Lagarde will speak in Brussels at 17:30 GMT.

In the US, Fed Chairman Jerome Powell will participate in a Policy Panel Discussion at 19:00 GMT. Data-wise, Initial Jobless Claims rose by 217K in the week to November 4. Later in the session, Atlanta Fed President Raphael Bostic (2024 voter, centrist) and Richmond Fed President Thomas Barkin (2024 voter, centrist) are also due to speak.

Daily digest market movers: Euro reclaims 1.0700 ahead of key events

The EUR extends the rebound beyond 1.0700 against the USD.US and German yields resume the upside on Thursday.Markets expect the Fed to continue its current monetary policy in December.The ECB looks to be planning a protracted pause until H2 2024.

ECB Vice President Luis de Guindos says rates cut chatter is premature.Geopolitical concerns in the Middle East continue unabated.Chinese CPI fell 0.2% in the year to October.BoJ’s Kazuo Ueda favoured the continuation of the current policy stance.

Technical Analysis: Euro risks extra losses once 1.0645 is breached

EUR/USD navigates a consolidative range around the 1.0700 neighbourhood on Thursday.

If the selling pressure persists, EUR/USD may return to the weekly low of 1.0495 (October 13), ahead of the 2023 bottom at 1.0448 (October 15) and the round number of 1.0400.

On the upside, the November high of 1.0754 (November 6) stands in the way of the crucial 200-day Simple Moving Average (SMA) at 1.0801 and another weekly top of 1.0945 (August 30). The psychological threshold of 1.1000 is aligned north of here, before the August peak of 1.1064 (August 10) and the weekly high of 1.1149 (July 27), all preceding the 2023 top of 1.1275 (July 18).

The pair’s outlook remains negative as long as it trades below the 200-day SMA.