EUR/USD Testing the 20 Daily SMA Again but the Main Trend Remains Bearish
The Euro has been falling for three months, pushed down by a strong US Dollar, which has been boosted by positive US economic statistics and an increase in US bond yields, while the economic data from the Eurozone has been deteriorating, leading the ECB into a more retreated position. Buyers have retained control, and moving averages have provided resistance throughout upward retracements.
The US bond yields have continued to increase which has helped the USD and sent this pair to around 1.0450 before retracing to 1.06. Although the price failed to break above the 20 SMA (gray) on the daily chart, which has been acting as resistance, and after a doji candlestick, sellers returned again, with the price dipping just below 1.05. Although we have seen some bullish momentum in the last two days despite the climb in the US treasury yields, it seems like the correlation with the USD is losing.
Anyway, buyers still failed to break above the 20 daily SMA yesterday, which stood right at 1.05. The German ZEW current economic conditions remain deeply negative as yesterday’s report showed, so the economy is in a difficult position. This will continue to keep the Euro bearish, so we will try to sell this pair close to the 20 SMA.
Germany October ZEW Survey – 17 October 2023
- October ZEW survey current conditions -79.9 points vs -80.8 points expected
- September ZEW survey current conditions were -79.4 points
- Outlook in October -1.1 points vs -9.3 expected
- Prior outlook was -11.4 points
The good news here is that the economic sentiment i.e. outlook reading is seeing a significant improvement, beating estimates and that points to some further optimism in the months ahead. That being said, the current assessment of the German economy has barely changed but ZEW notes that “it seems that we have passed the lowest point”. Adding that the heightened expectations reading owes much to the anticipation of lower inflation.
EUR/USD Live Chart
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