Despite European Central Bank Governor Lagarde's confirmation that it is too early to declare victory over record inflation, the price of the currency pair EUR/USD halted its gains at the resistance level of 1.0965 and stabilizes around the level of 1.0922. obviously, this is awaiting the reaction to the announcement of the content of the minutes of the last meeting of the US Federal Reserve. Recently, European Central Bank President Christine Lagarde said that the European Central Bank cannot declare victory over inflation yet. Therefore, he will have to remain “paying attention” until he moves firmly towards the 2% target. Lagarde added in a speech in Berlin on Tuesday that while the energy and supply chain shocks that boosted prices are now subsiding, Labor markets are still adjusting, and wages are rising.
“We faced a major inflationary shock and made a major policy adjustment in response,” she added. Also, “The effects of this amendment are becoming increasingly felt and inflation pressures are receding.”
What is expected for the dollar price in the coming days?
A new analysis by one of the world's largest banks finds that the current bout of US dollar weakness has its roots in Asia. Meanwhile, HSBC Bank believes that the Chinese authorities have decided to significantly reduce the exchange rate of the dollar against the yuan. Also, the decline in yen positions are the main drivers of the rise in the Asian currency market on a broader scale. In this regard, Joey Chiu, head of Forex research at HSBC Bank, says: “Most often, developments in the US market determine the course of the US dollar and Asia - for example, during the first half of November, when we saw bearish surprises in key US data - But since last Friday, things have turned around. Adding, “As Asian currencies move independently, and the US dollar weakens on a large scale.”
On the economic calendar side:
Previously owned home sales in the United States dropped by the largest amount in nearly a year in October, highlighting the impact of rising mortgage rates and continuing high prices on the resale market. In this regard, data from the National Association of Realtors yesterday showed that closed contracts fell by 4.1% from the previous month to an annualized pace of 3.79 million, the lowest level since 2010. This figure was weaker than all estimates except one in a Bloomberg survey of economists. The combination of high mortgage rates and stubborn prices has been a deterrent for both buyers and sellers. However, with the decline in mortgage interest rates as the Federal Reserve approaches the end of its tightening cycle, this provides some hope that the housing market may be reaching its bottom.
EUR/USD Forecast Today:
No change in our technical view of the performance of the EUR/USD, as there is a clear shift in direction based on the performance on the daily chart below. Moreover, bulls will gain stronger momentum by moving above the psychological resistance at 1.10. As mentioned before, it is essential to consider that this may trigger some technical indicators towards levels saturated with buying. Conversely, on the same time frame, if the EUR/USD moves towards the support level of 1.0830, it poses a threat to the current dominance of the bulls.
Today, the EUR/USD currency pair is on an important date with numerous economic releases in the United States. Also, the announcement of weekly jobless claims, durable goods orders, and the US consumer confidence reading. Finally, this comes ahead of the US holiday tomorrow on Thursday.
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