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Euro hovers around 1.1250

The EURUSD pair closed slightly higher on Tuesday, November 23, up 0.09% to 1.1248. The price rallied to 1.1275, but then the rally stalled. The gains were fueled by upbeat PMI prints out of Germany and the Eurozone for November.

The Eurozone manufacturing PMI came in at 58.6 in November, ahead of 57.3 expected and 58.3 in October. The index reached a two-month high. The services PMI rose to a three-month high of 56.6 in November, overshooting the median forecast of 53.5 and 54.6 in the previous month.

Throughout the day, the 55-day SMA (balance line) acted as resistance. Buyers tried to breach it twice, but these attempts were unsuccessful. Buying likely decreased because of a pullback in the AUDUSD and NZDUSD pairs. Investors appear to be worried about the economic impact of surging COVID-19 infection rates and new containment measures across Europe.

Today’s macro agenda (GMT+3)  

  • 12:00 Switzerland: ZEW economic sentiment index (November); Germany: IFO business confidence (November)
  • 14:00 UK: CBI industrial trends orders (November)
  • 16:30 US: 3Q GDP (second estimate); durable goods (October), weekly initial jobless claims, trade balance (October)
  • 17:30 UK: BoE MPC member Silvana Tenreyro
  • 18:00 US: personal spending and personal income (October), Michigan consumer sentiment (November), new homes sales (October)
  • 18:30 US: EIA weekly petroleum status report
  • 22:00 FOMC minutes

Current outlook

Major currencies were showing patchy performance in Asian trading. The kiwi dollar topped the list of underperforming currencies, retreating after the RBNZ announed a rate hike. The regulator raised the OCR by 25 bps to 0.75%. Traders were upset that monetary tightening would be less hawkish than they expected.

Today’s focus will be on Q3 US GDP (second estimate), durable goods, core PCE and the FOMC minutes.

Technical analysis

By the time of writing, the euro was trading at 1.1245. An upsurge in market volatility can be expected during the North American session after a new batch of macro data comes out. Resistance is located at 1.1250 (55-day SMA). The target has decreased from 1.1300 to 1.1278. The sooner buyers reach it, the higher the odds of further recovery to 1.1330. Major currencies are drawing support from a decline in 10-year UST yields. In case of negative developments, buyers will have to retreat to the 1.1200-1.1210 range.

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