Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View More
EUR/USD Outlook Remains Bearish Ahead of the October ECB Meeting

EUR/USD Outlook Remains Bearish Ahead of the October ECB Meeting

Cecilia Sanchez Corona, Contributor

EUR/USD KEY POINTS:

  • Eurozone final inflation came in slightly below market expectations
  • Risk aversion nudges US Treasury yields higher bolstering the USD amidst growing recession fears
  • EUR/USD outlook remains gloomy
EUR Forecast
EUR Forecast
Recommended by Cecilia Sanchez Corona
Get Your Free EUR Forecast
Get My Guide

Most Read:US Dollar Price Action Setups: EUR/USD, GBP/USD, USD/CAD, USD/JPY

The final Eurozone CPI headline data for September indicates rising price pressures in the Euro-area which puts the ECB on edge for the upcoming policy meeting. This new norm of high prices and tighter financial conditions around the world are fueling concerns about a global recession, driving volatility, risk aversion and demand for safe-haven assets, underpinning USD strength.

The September annual headline inflation figure for the euro area was revised slightly downward. The preliminary figure was 10.0% but was reduced to 9.9% year-over-year. Despite the adjustment and avoiding the double-digit mark, inflation pressures remain too high and put the ECB in a difficult position as the economy in the euro-area is nowhere near strong, while also navigating the energy crisis.

image1.png

At the ECB’s next meeting on October 27, markets expect a second consecutive interest rate hike of 75 bp, following the 50 bp increase in July. While this would be positive for the euro, concerns about a global recession are mounting as central banks around the world continue to raise interest rates.

In the United States, interest rates have reached levels not seen since 2008. The 10-year yield now stands above 4.10% and the Federal Reserve has reinforced its commitment to curb inflation by pushing rates into a more restrictive territory. This rise in yields is underpinning dollar strength which also translates into further euro weakness, but also because, in fundamental terms, the U.S. economy is in better shape than the Eurozone.

From a technical standpoint, during the past two days EUR/USD advanced as investors weighed some positive news items, but the medium-term outlook remains bearish for the currency pair. Looking at the Daily Chart, there is a short-term range between 0.9540 and 0.9999. Within that area, there is resistance around 0.9875 which is close the 100 SMA, while support is seen around 0.9665

Looking ahead, Eurozone consumer confidence is expected to be released this Friday, ahead of a round of PMI figures on Monday, Germany’s Ifo Business on Tuesday, and the ECB’s monetary policy decision next Thursday.

EUR/USD Daily Chart

image2.png

Source:TradingView

How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by Cecilia Sanchez Corona
Improve your trading with IG Client Sentiment Data
Get My Guide

EDUCATION TOOLS FOR TRADERS

  • Are you just getting started? Download thebeginners’ guide for FX traders
  • Would you like to know more about your trading personality? Take theDailyFX quizand find out
  • IG's client positioning data provides valuable information on market sentiment.Get your free guideon how to use this powerful trading indicator here.

---Written by Cecilia Sanchez-Corona, Research Team, DailyFX

DailyFXprovides forex news and technical analysis on the trends that influence the global currency markets.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES