As of this writing the EUR/USD is near the 1.05730 as the month of November begins its trading, this mark is in the vicinity of where October’s trading got started. However, plenty of volatility was seen during the past handful of weeks for speculators and the road to profits was likely not easy. A high for the EUR/USD yesterday was near the 1.06760 mark, which actually came within sight of the high for October which was seen on the 24th when the currency pair traded near 1.06950.
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A combination of rather contradictory economic data and global risk-averse conditions have not helped create a meaningful trend in the EUR/USD, except for a rather mixed value range with plenty of reversals. The U.S Federal Reserve will release its FOMC Statement and Federal Funds Rate this evening. The Fed is not expected to raise interest rates, but it is not anticipated to turn dovish either. Higher interest rates in the U.S are likely to remain stubborn over the mid-term, while inflation is showing some signs of erosion, U.S consumers however continue to spend.
The EUR/USD is Caught in a Vicious Circle
While the Fed sounds aggressive, its counterpart the ECB does not. Yes, the European Central Bank is warning about inflation, but the lackluster economic conditions in Europe make it almost impossible for the ECB to consider raising interest rates over the mid-term. This means higher yields via U.S Treasuries could stay attractive which may lead to a greater need for USD via financial institutions, which helps fuel a consistently strong USD and thus a rather mediocre EUR/USD when looking for upside.
However, at some point optimist will start to think there is going to be a change of direction. At some point risk appetite is going to spring forth. Certainly there are plenty of financial institutions and traders who think the EUR/USD has been oversold, but this may be a case of bias because of where the financial institutions and traders are located. The low for the EUR/USD was near the 1.04500 ratio, but a bullish speculator of the currency pair would certainly point out this occurred on the 3rd of October.
Support and Resistance within the EUR/USD via Choppy Results
- Traders should remain cautious regarding the EUR/USD based on the results since the middle of July. The EUR/USD remains near low water marks and the last time the currency pair traded within this vicinity was in March of 2023.
- Yesterday’s move lower in the EUR/USD perhaps not coincidentally occurred when European GDP numbers proved to be recessionary, and U.S consumer confidence remained strong.
- If the EUR/USD sustains value below the 1.06000 level this could continue to make short-term traders nervous and consider the potential that the 1.05500 support ratio below could be a target.
EUR/USD Outlook for November 2023:
Speculative price range for EUR/USD is 1.04350 to 1.07310
The month of October was unable to spark a sustained trend upwards in the EUR/USD and current economic conditions make the prospect of a bullish trend higher during November rather hard to imagine. However, technically some traders may continue to look for upside price action when the EUR/USD hits perceived support levels which they believe will generate reversals higher. Traders looking for these higher moves should not be overly ambitious. Until the EUR/USD can sustain value above the 1.06500 mark for a solid duration, traders should anticipate more mixed results.
Regarding the prospects for a more serious downturn, traders who feel compelled to be sellers and look for additional momentum lower cannot be blamed. The EUR/USD remains near important lows and support ratios near the 1.05500 and 1.05000 should be monitored. If the EUR/USD breaks below the 1.05500 and selling pressure remains high a test of the 1.05000 would not be surprising. If the EUR/USD were to break below the 1.05000 level and see sustained trading below this ratio, it could set off additional alarm bells and a drive towards lower depths again.
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