EUR/USD Nears 1.0700 Amid Mixed Economic Signals and Fed Speculation

The EUR/USD pair witnessed a modest ascent, touching the 1.0700 level in Tuesday’s early Asian session. This movement comes as the pair benefits from the dampening U.S. Treasury yields, which exert pressure on the U.S. dollar, while concerns over a potential Eurozone recession cast a shadow over the euro’s gains. The pair is currently trading around 1.0700, marking a slight increase of 0.01% for the day.

European Central Bank (ECB) Vice President Luis de Guindos commented on the expected sluggishness in Eurozone’s economic growth, alongside emerging signs of a cooling labor market. Despite these challenges, the ECB anticipates a clearer inflation outlook by their December meeting, which will shape their policy direction. ECB President Christine Lagarde emphasized the necessity of curbing persistently high inflation, suggesting a maintained restrictive monetary stance.

Investors are now looking forward to the Eurozone Gross Domestic Product (GDP) figures for the third quarter, which are anticipated to show a modest contraction on a quarterly basis and a fractional expansion annually. Should the GDP figures fall short of expectations, the euro could face selling pressure.

In the U.S., inflation outlook estimates by the New York Fed have softened, potentially influencing the Federal Reserve’s interest rate trajectory. Despite Fed Chair Jerome Powell’s readiness to raise rates if needed to achieve inflation control, market expectations for a December rate hike remain low, according to the CME FedWatch Tool.

Today’s schedule also includes the release of Eurozone employment, growth data, and the ZEW economic sentiment survey. Stateside, the U.S. Consumer Price Index (CPI) figures are due for release. These economic indicators are expected to provide traders with new opportunities and directions for the EUR/USD pair.

From a technical perspective, EUR/USD is currently confronting resistance at 1.0695, with the stochastic indicator suggesting an overbought market. The pair’s bearish trend is expected to resume, targeting 1.0640 initially, and potentially stretching to 1.0540 if the prior support is broken. To maintain this bearish trajectory, it is critical for the pair to remain below the 1.0695 resistance level.

Today’s forecasted trading range is between 1.0600 support and 1.0740 resistance, with a bearish trend anticipated for the day.

EUR/USD Live Chart