EUR/USD Trims Weekly Gains But Holds Critical Support Level
2022.10.31 03:34
The pair has continued to pull back on Friday, trimming previous weekly gains, although it remains poised to close above Monday’s opening following mixed U.S. and European data.
At the time of writing, the EUR/USD pair is trading at the 0.9930 area, 0.3% below its opening price, and on track to post a 0.8% weekly advance, despite being rejected by the 100-day SMA earlier in the week.
On the data front, the – measured by the HICP – soared in October and reached 11.6%, way higher than the market consensus of 10.9%. On the other hand, German’s came in higher than expected.
While European Central Bank’s President Christine Lagarde stated on Thursday that the ECB was expecting economic activity to contract significantly in Q3, data revealed that the GDP of the largest economic block of the EU expanded at an annualized rate of 1.2%, beating the consensus of a 0.8% growth. However, the euro area outlook is still surrounded by uncertainty and doesn’t allow the euro to capitalize on the data.
Across the pond, ahead of next week’s Fed meeting, the showed prices grew at an annualized pace of 6.2% in September versus 5.8% the previous month.
From a technical perspective, the EUR/USD short-term bias remains neutral as indicators have turned flat in the daily chart suggesting that the bulls are losing momentum.
The price has printed lower lows and lower highs and approaches a broken-out descending channel to test it as support at the 0.9900 area.
A break below this level could add pressure on the shared currency, with the following supports seen at the 20-day SMA at 0.9837 and the 0.9800 area.
On the upside, the next resistance levels could be found at parity and 1.0080, where the 100-day SMA stands. After being rejected twice this week by this level, a break above would improve the euro’s outlook for the short term.
