EUR/USD Market Analysis: Structural Recovery May Continue

ByBarbara Byrne

Nov 18, 2021

The Euro/Dollar tries to recover from Wednesday’s fresh 2021 lows in the vicinity of 1.1260. The duo’s oversold circumstances appear to have sparked a recovery in spot prices to levels that are once again just above the 1.1300 mark. The rebound may still have some life left in it, as the next interim obstacle is located at the 10-day simple moving average (SMA) of 1.1445, which is clear of the 20-day SMA of 1.1524. The weekly low of 1.1609 is reached even farther up the chart (November 9).

Meanwhile, as long as the duo moves underneath the next resistance line (off September’s high), which is now slightly over 1.1600, more losses are likely. In the longer term, the bearish view remains in place as long as the currency remains below the 200-day simple moving average, which is now at 1.1861.

Review Of The Technical And Fundamental Details


The 23.6% Fib retracement of the downturn that began earlier in the month is presently functioning as opposition at 1.1360. If buyers can convert that level into support, the rally might extend to the next Fibonacci goal at 1.1400. Beyond that mark, the 50-period SMA on the four-hour graph and the Fibonacci 50% retrace create the next barrier at 1.1440.

Meanwhile, the Relative Strength Index (RSI) signal is approaching 50, indicating that sellers are staying on the sidelines until the correction plays out. On the negative, supports are placed around 1.1300 (psychological level, stationary level), 1.1260 (16-month low), and 1.1200 (psychological level).

After maintaining over 1.1300 in the early European session, the EUR/USD has regained momentum and has prolonged its rebound above 1.1350. In the absence of fundamental triggers, the moderate USD decline appears to be assisting EUR/USD in maintaining its upward momentum. After Wednesday’s dramatic drop, the benchmark 10-year US Treasury bond yield remained over 1.6% on Thursday, making it harder for the Greenback to find bidders.

Furthermore, the favorable movement in the market mood does not allow Greenback to beat risk-sensitive competitors such as the currency union. The S&P futures were seen climbing 0.25% daily, indicating that risk flows would likely remain dominant in the markets following Wall Street’s opening bell. Previously in the day, ECB official Robert Holzmann suggested that quantitative easing must finish since inflation will remain high for longer than previously projected. Holzmann’s hawkish tone appears to be helping the shared currency as well.

The US Labor Department said on Thursday that new unemployment numbers fell to 268,000, slightly lower than the market’s projection of 260,000. Furthermore, the Philadelphia Fed Manufacturing Index rose strongly to 39 in November from 23.8 in October. Nonetheless, the US Dollar Index remains in the negative zone below 96.00 following these announcements.

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