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Nov 16 - 11:55 AM

EUR/USD - COMMENT-EUR/USD Rally May Just Be Pausing

By Christopher Romano  —  Nov 16 - 10:25 AM

EUR/USD held firmer on Wednesday even after retreating back below the 200-day moving average, with U.S. data giving pause for thought but unlikely to alter the upward trajectory.

An upside surprise in U.S. October retail sales nL1N32B1X3 temporarily boosted U.S. rates EDH3 and yields US10YT=RRUS2YT=RR but momentum faded quickly.

Investors may see the retail sales data as clouded by inflation, especially in light of other releases.

October industrial production nAPN0R03U6 and November NAHB housing nN9N2YW01D hinted that the U.S. economy is likely weakening.

Further inversion of the U.S. Treasury curve suggests investors are discounting the sales data.
The 2s-10s curve inverted to its widest since 2000 while the 3-month-10 year curve traded at wides not seen since 2007.

The inversions indicate a higher probability for recession, which could lead the Fed to alter its hawkish hiking policy.

EUR/USD technicals highlight upside risks.
Consolidation of gains off the Nov.
3 low will give daily RSI a chance to unwind overbought conditions.
Monthly RSI implies longer-term upward momentum remains.

Resistance near 1.0500 is an impediment.
Should it break, the 1.0800 area would be targeted.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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