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Nov 16 - 11:55 AM

EUR/USD - COMMENT-Growing Fed Rate Cut Expectations Delight EUR/USD Longs

By Christopher Romano  —  Nov 16 - 09:45 AM

EUR/USD turned positive Thursday and rallied above the 50% Fibonacci retracement of the 1.1276-1.0448 drop as more data emerged suggesting the Fed could cut rates sooner than expected, keeping 1.0950/60 and potentially more elevated targets in play.

U.S. weekly and continuing claims increased more than estimated, indicating additional labor market softening.

October U.S. export and import prices significantly surprised to the downside and turned negative after rising in September.

November Philly Fed business conditions were stronger than expected at -5.9 versus -9.0 in October but prices paid fell to 14.8 from 23.1 -- reinforcing the broader U.S. disinflation trend.

Treasury yields US2YT=RR fell, eroding some of the dollar's yield advantage over the euro as German-U.S.
2-year spreads US2DE2=RR tightened.

Technicals highlight upside EUR/USD risks.

Rising daily and monthly RSIs imply upward momentum is in place and consolidation of gains off the Nov.
14 low is another bull signal.

EUR/USD's rally in November following October's monthly doji candle reinforces bullish signs.

The 1.0950/60 area is a nearby target once the rally resumes but EUR/USD bulls may be targeting resistance above 1.1050 as well as the 76.4% Fibo of 1.1276-1.0448.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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