EUR/USD Reclaims Some Momentum At 1.1370, Eyes On Data

On Tuesday, the single currency tries a modest recovery against its American counterpart and succeeds to raise EUR/USD to the 1.1380/85 zone. Following four straight daily pullbacks on Tuesday, the EUR/USD has regained its luster and is modestly up in value. Indeed, the spot has lost significantly more than 2 cents from reaching monthly highs at 1.1616 on November 4 and new 2021 lows near 1.1350 on Monday.

This week’s severe sell-off was triggered by the return of the Dollar’s strength, as well as dovish comments from the European Central Bank’s Christine Lagarde, who argued that tightening monetary conditions now would be no more harmful than beneficial. The rise in the value of the Dollar coincided with a rebound in US bond rates, as well as persistent fears about the prospect of rising inflation. As a result of Monday’s rise, the yield on the important German Bund, which matures in 10 years, has increased to -0.22 percent.

Another adjustment of Q3 GDP estimates in the broader Euro area is scheduled on the next day, followed by another interview with IMF Chairwoman Christine Lagarde. Retail Sales in October will be the focus of attention in the United Kingdom, followed by Industrial Production and statements by the FOMC’s Bostic, Harker, Daly, and Barkin, among others.

What To Watch For In The EUR/USD Pair

On Monday, the EUR/USD fell to fresh lows at 1.1350 as the currency pair continued to deteriorate at a rapid pace. As is customary, the market movement of the pair is likely to be dominated by the dynamics surrounding the Dollar, with brief bursts of strength expected to be triggered by an improvement in the risk-complex environment.

According to a broader macroeconomic perspective, the loss of velocity in the improving economy in the area – as evidenced by some weakening detected in key indicators – combined with an increase in COVID-19 instances is also regarded as casting doubt on investors’ confidence. Further out, the Euro should be kept under close scrutiny as a result of the underlying debate between investors’ assumptions of a likely lift-off sooner than expected and the ECB’s so far light touch, all in the context of persistently elevated rising prices in the bloc and growing belief that it could last for a longer period than originally expected.

The following are the most important happenings in the Euro region this week: GDP in the Eurozone for the third quarter, ECB Lagarde (Tuesday) – EMU Final CPI, ECB Lagarde (Wednesday) – ECB Lagarde (Friday).

The following are the most pressing concerns on the back burner: In the aftermath of the outbreak, there has been an asymmetric economic recovery in the region. The long-term viability of the increase in inflation statistics. In light of the growing tension between the EU, Poland, and Hungary over the rule of law, there has been a resurgence in political activity surrounding the EU Recovery Fund. Speculations on the European Central Bank tapering.

Overview Of The Technical Details

EUR/USD CHART Source: Tradingview.com

Four-hour graph: RSI indicator is below 30, indicating oversold conditions. However, the RSI went below 30 last week, and the anticipated technical correction may not be substantial enough to entice buyers.

Initial support is at 1.1360. (stationary level). A daily closing below that level may signal more losses towards 1.1300. (psychological level). Meanwhile, the EUR/USD is still trading in a one-week-old declining regression channel, with 1.1400 as the initial technical barrier, followed by 1.1440 (stationary line) and 1.1470 (stationary line).