EUR/USD Return to $1.05 Dependent on ECB Chatter and the Minutes
It is a relatively busy day for the EUR/USD on the economic calendar. On the data front, the German Ifo Business Climate Index will draw interest early in the European session.
On Wednesday, Markit’s S&P Global Flash German Composite PMI survey ‘highlighted widespread concerns about the effects of high inflation, rising interest rates, and heightened levels of uncertainty on investments and economic conditions.’
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Despite the negative sentiment, the level of pessimism continued to improve since the September low. Better-than-expected Ifo numbers would deliver EUR/USD support when considering the Markit survey results. Economists forecast the Index to rise from 84.3 to 85.0.
While today’s stats will draw interest, the ECB’s monetary policy meeting minutes will likely garner greater interest. Investors will be looking for clues on what to expect next month. Signals from ECB members have been mixed, creating monetary policy uncertainty.
ECB member commentary will also need consideration. ECB members Luis de Guindos, Isabel Schnabel, and Andrea Enria will speak today.
The influence of the ECB minutes and ECB member chatter on the EUR/USD will likely be more than usual following the FOMC meeting minutes from overnight.
EUR/USD Price Action
At the time of writing, the EUR was down 0.01% to $1.03937. A mixed start to the day saw the EUR/USD fall to an early low of $1.03924 before steadying.
Technical Indicators
The EUR/USD needs to avoid the $1.0366 pivot to target the First Major Resistance Level (R1) at $1.0435. The ECB minutes and member chatter need to be hawkish to support a breakout session.
In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.0474 and resistance at $1.05. The Third Major Resistance Level (R3) sits at $1.0583.
A fall through the pivot would bring the First Major Support Level (S1) at $1.0326 into play. Barring a risk-off-fueled sell-off, the EUR/USD pair should avoid sub-$1.030 and the Second Major Support Level (S2) at $1.0257. However, dovish ECB minutes and commentary could deliver a sharp pullback.
The third Major Support Level (S3) sits at $1.0148.
Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 50-day EMA ($1.02863). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.
A hold above the 50-day EMA ($1.02863) would support a breakout from R1 ($1.0435) to target R2 ($1.0474) and $1.05. However, a fall through the 50-day EMA ($1.02863) would bring sub-$1.03 into play. The 200-day EMA sits at $1.00845.
The US Session
There are no US economic indicators for the markets to consider, with the US markets closed for Thanksgiving.