EURUSD RECOVERED GROUND TOWARDS THE END OF THE NY SESSION, DESPITE HOT US CORE PCE

The US dollar strengthened against the US majors but weakened towards the end of Wall Street. GDP weakened in France and Spain, while German inflation continued to rise, above 10%. EURUSD is neutral on the downside, although slightly biased to the upside, with strong resistance at the 100-DMA. EURUSD ended Friday’s session almost flat around 0.9960, up 0.02 percent. US economic data strengthened the US dollar thanks to further Fed action; Personal consumption expenditures, the main measure of inflation, rose above August figures, contrary to the euro. However, the common currency recovered somewhat against the dollar at the close in New York. At the time of writing, EURUSD is trading at 0.9966, slightly above its opening price. Fed MEASURE OF INFLATION HIPPED 5% THRESHOLD Wall Street ended the day flat. While the story of a possible Fed pivot is circulating in financial markets, US economic data, especially inflation, may prove that wrong. The US Commerce Department showed US core PCE spending rose 0.5% in September, in line with estimates, while the annual figure rose 5.1%, which was less than expected but higher than the , 9% of the previous month. on friday Another report released by the US Department of Labor said the labor cost index (ECI) rose 1.2% in the third quarter, in line with Bloomberg estimates, and was 1. % lower than in the second quarter. The data did not surprise traders, who turned to riskier assets on speculation that a reversal of the Federal Reserve was imminent. However, Friday’s data further justified the Fed’s interest rate hike of 75 basis points at the November meeting, while the odds of another big hike at the December meeting jumped to .9% from 3 .1% yesterday. Market reaction to the headlines saw the EURUSD fall from an intraday high of 0.9989 to an intraday low around 0.9920. However, as the North American session progressed, EURUSD bounced back from the bottom and ended the session around the 0.9960s. Consumer Sentiment Remains Unchanged As US Inflation Expectations Ease In addition to US inflation data, the University of Michigan’s October consumer sentiment was 59.9, with inflation expectations unchanged. According to the report, one-year inflation expectations rose from 5.1 percent to 5 percent, while the five-year inflation forecast is 2.9 percent. The average PCE of the Dallas Fed last fell from 6% to .3% in September. Meanwhile, the Atlanta Fed’s GDPNow forecast for the fourth quarter is 3.1 percent. Growth slowed in France and Spain and German inflation accelerated At the same time, the European economic calendar reflects the gross domestic product (GDP) of France, Spain, Germany and the Eurozone, inflation and the economic situation of the EU. . Third-quarter growth in France and Spain met forecasts, although they showed signs of slowing as both countries trail second-quarter figures. Meanwhile, Germany reported its previous October inflation reading, which rose 10. % year-on-year compared to an estimate of 10.1% and beat last month’s reading. Therefore, the assessments of the European Central Bank (ECB) on further tightening are justified, as some ECB speakers, namely Muller, Vasle and Villeroy, commented that interest rates are still low, not at restrictive levels. It is worth noting that Vasle said he expects more rates, while Villeroy added that the ECB will decide whether to raise interest rates at a meeting. In the aforementioned situation, the ECB and the US central bank continue to tighten monetary policy, which is positive for both the euro and the US dollar. However, interest rate differentials and high inflation prospects favoring the US dollar with peak targets would likely be under selling pressure, keeping exchange rates below parity. EURUSD Price Forecast: Technical Outlook Despite Friday’s rally, EURUSD remains neutral to bearish as seen on the daily chart. Investors should note that the euro has risen in four of the last five trading days and remained above the 50-day exponential moving average (EMA). However, on the only day EURUSD rose to the 100-day EMA, it was rejected and the pair fell back to the October 27 daily low of 0.9957. The Relative Strength Index (RSI) at is swinging upwards, suggesting buyers are gaining momentum. However, to switch from bias to neutral, EURUSD buyers need to capture the 100-day EMA and 1.0100. And if the euro clears 1.0200, the movement to the 200-EMA is imminent. On the positive side, key support levels are at the 50-day EMA at 0.9887. Once removed, the next support would be at the 20-day EMA at 0.9838, before 0.9800, followed by the October low at 0.9631.

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