Euro Rides High as US Dollar Ponders the Path Ahead with Fed and G-20 in the Frame

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Euro, EUR/USD, US Dollar, Fed, China, Hang Seng, USD/JPY, Crude Oil, RBA – Talking Points

  • Euro appears to be in a holding sample since final week’s features
  • The Fed stays vigilant, however USD and Treasury yields are pretty stagnant
  • China-US relations look to be enhancing. Will that enhance the USD, undermining Euro?

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The Euro continues to threaten to make a brand new 3-month peak in opposition to the US Dollar as currency markets pause considerably. This is in the aftermath of final week’s US CPI and whereas the G-20 in Bali will get underway at this time.

The Euro was aided by feedback from Federal Reserve Vice Chair Lael Brainard in a single day.

She hinted that the tempo of the Fed’s mountaineering program may have to gradual at a while ‘soon’. At the identical time, she additionally made it clear that there was nonetheless some work to do in phrases of the Fed’s battle on inflation.

Treasury yields ticked up a number of foundation factors out to 10 years in the US session and they’ve been regular to this point by Asian trade.

The G-20 received underway and the spotlight to this point has been the obvious cordial feedback round US-China relations from each side.

The assembly yesterday between US President Joe Biden and Chinese chief Xi Jinping led to the constructive language used from all events as tensions look like thawing to some extent.

This is the first time the leaders have met whereas holding the prime job of their respective international locations. They met a number of instances earlier than when each held the function of Vice President.

An agreed communique from the G-20 is one thing that observers hadn’t been very assured of attaining going into the assembly, however now it appears doable.

Mainland Chinese and Hong Kong equity indices have been buoyed by the prospect of presidency assist for the property sector. The Hang Sang index gained greater than 3.5% at one stage, defying some comfortable financial information.

Chinese year-on-year industrial manufacturing got here in at 5.0% as a substitute of the 5.3% anticipated to the finish of October. Retail gross sales for the identical interval have been -0.5% fairly than the 0.7% forecast.

Elsewhere, Japanese seasonally adjusted 3Q quarter-on-quarter GDP got here in -0.3% in opposition to forecasts of 0.3% and in opposition to the 0.9% beforehand.

Seasonally adjusted annualised quarter-on-quarter GDP to the finish of September was -1.2% as a substitute of 1.2% anticipated and 3.5% prior.

After a delayed response, USD/JPY had a crack increased after the information, shifting above 140.60.

Crude oil slid decrease in a single day after the Organization of Petroleum Exporting Countries (OPEC) lower their demand forecast for the fourth quarter once more.

The WTI futures contract dipped towards US$ 85 bbl whereas the Brent contract is beneath US$ 93 bbl. Gold has held onto in a single day features, buying and selling above US$ 1,770 at the time of going to print.

RBA assembly minutes have been out at this time and revealed that the financial institution thought of a 25- or 50-basis level raise in charges at their assembly 2-weeks in the past.

They hiked by 25 bp then however going ahead they’re stated that they’re ready to pause or return to giant hikes relying on information at the time.

After UK jobs information, there will likely be EU GDP numbers adopted by US PPI.

The full financial calendar might be seen right here.

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How to Trade EUR/USD

EUR/USD TECHNICAL ANALYSIS

EUR/USD has been chopping resistance wooden this week as it seeks to beat a collection of breakpoints and the August peak at 1.0369. This stage could proceed to supply resistance.

Further up, the 200-day easy shifting common (SMA) may provide resistance at 1.0428.

The latest rally broke above the higher band of the 21-day easy shifting common (SMA) based mostly Bollinger Band. A detailed again inside the band may sign a pause in the bullish run or a possible reversal.

Support may very well be at the breakpoints at 1.0198, 1.0094 and 1.0090. The latter coincides with the 10-day SMA.

Chart Created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

Please contact Daniel through @DanMcCathyFX on Twitter





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