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Basically
EUR/USD briefly dips and returns to the sub-0.9900 zone following an equally unexpected rally in the dollar, all in response to better-than-expected prints from US ISM Manufacturing in October (50.2).
The results did nothing but reinforce the view of a resilient US economy at a time when some Fed rate-setters hinted at the possibility of starting a debate about the likelihood of a recession. slow the pace of the next rate hikes as soon as the December meeting.
Additional releases in the US calendar showed Construction Spending unexpectedly up 0.2% month-on-month in September, the last S&P Global Manufacturing PMI at 50.4 (also beat estimates) and JOLT Job Opportunities increased to 10,717 million also in September.
Meanwhile, the price action around the European currency is expected to closely follow dollar dynamics, geopolitical concerns and the Fed-ECB divergence. However, the resurgence of speculation around the potential Fed pivot seems to have taken some of the strength away from the latter.
The impact of the war in Ukraine and the lingering energy crisis on the region’s growth and inflation prospects has increasingly plunged the ECB into a deep crisis that has had many effects on the single currency.
Technical outlook
After a slight recovery this morning, the pair continues to be under strong downward pressure to return to the hard support at 0.987. This is a hard support on the daily frame, so if a break is broken, EURUSD will return to the downside, it can fall back to 0.9800 and 0.9750.
Currently, the pair is trading at the support zone, with no signs of turning back. With strong decreasing force, we recommend waiting for a pullback to sell this pair again.
0.993 will act as stiff resistance, waiting to sell this price area.
