EUR/USD: Stalemate with Two Scenarios!

2023年11月13日

The EUR/USD pair starts the week with a positive outlook in the early hours of Monday's Asian trading. The pair's rebound is supported by the consolidating stance of the US Dollar. Bouncing from last week's low of 1.0656, the pair remains capped below the 1.0700 threshold. The Relative Strength Index (RSI) on the 4-hour chart has retraced below the 50 levels, while EUR/USD has fallen below the mid-point of the ascending regression channel, indicating a bearish short-term outlook. If EUR/USD fails to stabilize above 1.0680 (the mid-point of the ascending channel), sellers may remain interested. In this scenario, the 50-period Simple Moving Average (SMA) acts as temporary support at 1.0660 before 1.0640 (Fibonacci 38.2% retracement level of the latest downtrend) and 1.0620 (lower limit of the ascending channel, 100-period SMA). EUR/USD came under bearish pressure and declined below 1.0700 in the late American session on Thursday. The pair remains relatively quiet Friday morning, while technical analysis indicates a slight bearish bias.

Participating in a monetary policy panel organized by the International Monetary Fund on Thursday, Federal Reserve Chairman Jerome Powell reiterated the data-dependent approach. "We are making decisions meeting by meeting, based on the totality of the incoming data and their implications for the outlook for economic activity and inflation," Powell stated. However, Powell noted they are not confident that they have achieved a 'sufficiently restrictive' policy stance to bring inflation down to 2% over time. This comment provided a boost to the US Dollar (USD) and caused a decline in EUR/USD. The Euro Stoxx 50 Index opened in negative territory on Friday, reflecting a cautious market stance. Meanwhile, US stock index futures were last seen rising between 0.1% and 0.3%. In case Wall Street's main indexes rebound following Thursday's decline, the USD could struggle to continue to outperform its rivals. On the other hand, a negative shift in risk sentiment could weigh on EUR/USD ahead of the weekend. In fact, the market is in a stalemate between a demand zone and a supply zone. I expect either a pullback towards 1.062, where we have a demand zone at the Fibonacci level of 0.62 before a long restart, or a further upward move towards 1.074 with a subsequent fall on the rebound due to pressure from the sell order block. Let me know what you think, happy trading to everyone from Nicola, the CEO of Forex48 Trading Academy.