EUR/USD Falls To Two-Week Lows After Fed, Nonfarm Payrolls Eyed
2022.11.04 02:52
The fell for the fourth day in a row on Thursday and hit its lowest level in two weeks as the greenback continued to strengthen in the aftermath of the Federal Reserve and ahead of the October U.S. report.
At the time of writing, the EUR/USD pair is trading at the 0.9750 area, 0.67% below its opening price, and over 300 pips below last week’s peak. The pair hit a low of 0.9730 earlier in the session, last seen on October 21.
The EUR/USD has been moving steadily south, making lower lows and lower highs after being rejected by levels above parity heading into the Federal Reserve verdict. On Wednesday, the Federal Open Market Committee (FOMC) lifted the fed funds range by 75 basis points to 3.75%-4% as expected.
In the subsequent , Chairman Jerome Powell said that recent data suggested that the ultimate level of interest rates will be higher than anticipated and reaffirmed the Fed’s commitment to cool inflation down. However, he acknowledged that the pace of tightening would need to slow eventually.
After a short-lived pullback, U.S. yields and the dollar bounced significantly as markets understood Powell’s message as the central bank will not be slowing down in December.
In the meantime, European Central Bank President Christine Lagarde said on Thursday that a “mild recession” is possible but wouldn’t be sufficient to stem .
From a technical standpoint, the EUR/USD pair holds a short-term negative bias, with the price losing the support of the 20-day SMA and indicators heading down in negative territory on the daily chart. On the downside, the next support level could be faced at the 0.9700 area, followed by October’s monthly low of 0.9630.
On the upside, short-term resistance is given by the 20-day SMA at the 0.9830 zone, followed by the 0.9900 area, where the upper side of the nine-month-long descending channel stands after a failed break as the EUR/USD couldn’t hold it as support.
