EUR/USD fell on Monday, breaking below the 10-day moving average and 23.6% Fibo of the 0.9528-1.0481 rally as inflation data, COVID developments and interest rates posed new threats to its recent rally.
German October PPI delivered a large downside surprise nL8N32H146 that stoked hopes for inflation relief.
Euribor prices rallied as investors priced in a lower terminal ECB rate FEIU3 while the dollar's yield advantage increased as German-U.S.
2-year spreads widened.
Rising COVID cases in China and the first recorded deaths since May nL1N32H07M fueled concerns about renewed lockdowns hindering economic growth, which could negatively impact the euro zone due to strong trade ties.
Daily technicals highlight downside risks and indicate the rally off September's monthly low could be in jeopardy.
EUR/USD's recent consolidation phase resolved with a move lower and the falling daily RSI implies short-term downside momentum is in place.
Monthly RSI is rising but the long upper wick developing on November's monthly candle is likely a concern for EUR/USD longs.
The 38.2% Fibo of 0.9528-1.0481 and October's monthly high are key short-term supports, a break of which could lead EUR/USD back down to parity.
For more click on FXBUZ