The EUR/USD currency pair reached the resistance level of 1.0365, and closed the week's trading stable near that resistance. The disappointing US inflation figures were a valid reason for the large-scale operations of the US dollar against other major currencies. Those results had a strong and direct impact on the future tightening of the US Federal Reserve's policy.
The EUR/USD currency pair is trading influenced by the announcement that the German Harmonized Consumer Price Index for October matched the expected change (annualized) by 11.6%. On a MoM basis, the index also met expectations of 1.1%. On the other hand, the general CPI was in line with expectations (monthly) and (annual) at 0.9% and 10.4%, respectively. From the United States, the Michigan Preliminary Consumer Confidence Index for the month of November missed the expected reading of 59.5 with a reading of 54.7. Prior to that, the US CPI excluding food and energy missed expectations (monthly) and (annualized) at 0.5% and 6.5%, respectively, with a change of 0.3% and 6.3%. On the other hand, US initial jobless claims came in at 225K for the week ending November 4th, below expectations of 220K.
US Treasury Secretary Janet Yellen said the United States and other leading economies should recognize the "ramifications" arising from their responses to economic challenges. Yellen told reporters Sunday in Bali, Indonesia, where world leaders are meeting this week for the G20 summit. For its part, the Federal Reserve raised US interest rates by 4 percentage points this year in a vigorous attempt to tackle inflation. This has caused problems for many countries, as dollar-denominated goods have become more expensive and dollar-denominated debt is now more difficult to pay off. "We are very concerned about debt" among low-income countries, she added.
The Treasury secretary also said the problems currently plaguing economies around the world were "extremely unusual" in that they vary widely by country. Compare this to the situation that followed the financial crisis in 2008-2009. "After the global financial crisis, countries could unite and say, 'We need fiscal stimulus,'" she added, "but now countries have different fiscal spaces, different inflationary pressures."
Yellen has consistently signaled her support for the Fed's moves to bring down the worst bout of inflation in 40 years. However, the statements indicate an awareness that US policy has consequences around the world. Yellen also spoke of 2022 as a challenging year for the G-20, a forum aimed at promoting cooperation among the world's largest economies. The United States pushed the group to condemn Russia for its invasion of Ukraine. With resistance from Russia and some other G-20 members, that prevented the group from issuing joint statements after several high-level meetings.
But she praised the G20's announcement on Saturday to create a fund to support pandemic preparedness. She also said, "It has been a difficult year for the G20, especially the Russian invasion of Ukraine and tensions with China." And “the fact that we were able to collaborate and create a new multilateral initiative, I think, is noteworthy.”
EUR/USD Technical Outlook Today:
- In the near term and according to the performance on the hourly chart, it appears that the EUR/USD is trading within an ascending channel formation.
- This indicates a significant short-term bullish momentum in market sentiment.
- Therefore, the bulls will look to extend current gains towards 1.0362 or higher to 1.0410 resistance.
- On the other hand, the bears will target a potential pullback at around 1.0272 or lower at 1.0224 support.
In the long term and according to the performance on the daily chart, it appears that the EUR/USD is about to complete an upward breach of the formation of an ascending channel. This indicates a significant increase in the long-term bullish bias. Therefore, the bulls will target long-term profits at around 1.0560 or higher at the 1.0765 resistance. On the other hand, the bears will look to pounce on profits at around 1.0115 or lower at the 0.9896 support.
Ready to trade our Forex daily forecast? We’ve shortlisted the best Forex trading brokers in the industry for you.
