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Buyers attempt to hold 55-day SMA

The EURUSD pair ticked down 0.01% on Wednesday, November 17. During the North American session, the euro fell to 1.1263, from which the price action rebounded to 1.1332 (+68 pips). Strengthening of the euro was moderate due to a decline in the EURGBP cross.

Sterling gained support after the release of strong UK inflation data. In October, consumer prices rose to 4.2% compared to 3.1% in the previous month. The data strengthens market expectations that the BoE could raise rates in December.

Major currencies also got a boost from falling yields on 10-year bonds. Fed and ECB speakers, expect inflation to decrease in 2022. Some of them mentioned Lagarde's tactic of weakening the euro to lower the cost of debt servicing.

Today’s macro agenda (GMT+3)  

  • 16:00 US: Atlanta Fed President speech Raphael Bostic
  • 16:30 Canada: ADP employment change (October), and foreign securities purchases (September)
  • 16:30 US: Philadelphia Fed manufacturing index, initial jobless claims (Novermber 5-12)
  • 17:30 US: New York Fed President John Williams speech
  • 18:00 US: CB leading index (October)
  • 22:00 US: Chaicago Fed President Charles Evans speech
  • 23:30 US: San Fransisco Fed President Mary Daly speech

Current outlook

By the time of writing, major currencies were showing mixed performance. The New Zealand dollar topped the leaderboard. It strengthened after the release of inflation data. The 2-year ahead inflation series in New Zealand came in at 2.96% vs. 2.27% in the previous quarter. Experts say that the RBNZ will use this data point to raise rate by 25 bps on November 24.

Rafael Bostic, Charles Evans, John Williams and Mary Daly are on today’s lineup of Fed speakers. Bostic will speak virtually about regional perspectives ahead of the Metro Atlanta Chamber's 162nd annual meeting. Evans will address current economic conditions and monetary policy in a moderated Q&A with the BKD Financial Services Symposium. John Williams will participate in Fireside Chat: “The New Federal Reserve and ECB Strategies – Implications for Monetary Policy”. Mary Daly will participate in the virtual event “Fed Listens 2021: Pandemic Recovery and the Role of Care Work”.

Technical analysis

By the time of writing, the euro was trading at 1.1319. Price action recovered by 67 degrees from the low of 1.1263 and was hovering near the 55-day SMA (balance line). There is a big lineup of speakers today, but they shouldn't have much of an impact on the market. The DXY index also corrected to the balance line.

Market participants await fresh drivers. If the euro continues to trade sideways ahead of the North American session,  we could see a rebound to 1.1382. FX players should carefully monitor the EURGBP dynamic. The cross has reached key levels and could revert to a correction at any time. Gains in the cross imply support for the euro against the dollar. A pinbar has formed on the daily TF, so the odds that the recovery will continue remain high.

If the UST10-year yield rises sharply and dollar buying in the main pairs resumes, EURUSD could quickly slide to 1.1290.

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