Euro Today- Treasury yields rose a few basis points to the 10-year in the US session and have been steady through Asian trade so far. The G-20 is underway and the highlight so far has been the apparent cordial comments on US-China relations from both sides. Yesterday’s meeting between US President Joe Biden and Chinese leader Xi Jinping saw positive language from all sides as tensions appeared to ease to some degree. It was the first time the leaders have met while holding the top posts in their respective countries. They met a few times before when both were Vice Presidents.
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Euro Analysis Today




The Euro today continues to threaten to make a new 3-month peak against the US Dollar as currency markets take a breather. This is in the wake of last week’s US CPI and while the G-20 in Bali is taking place today. The Euro was helped by comments from Federal Reserve Vice Chair Lael Brainard overnight. She hinted that the pace of the Fed’s rate hike program may need to slow ‘soon’. At the same time, she also made it clear that there is still some work to be done in terms of the Fed’s fight against inflation. An agreed communique from the G-20 was something observers were not sure would be achieved at the meeting, but now seems likely. Mainland China and Hong Kong equity indexes were supported by the prospect of government support for the property sector. The Hang Sang index rose more than 3.5% at one stage, defying some weak economic data. China’s industrial production came in at 5.0% year-on-year, instead of the 5.3% anticipated for the end of October. Retail sales for the same period were -0.5% instead of the 0.7% forecast. Elsewhere, Japan’s Q3Q seasonally adjusted GDP came in at -0.3% against a forecast of 0.3% and against a previous 0.9%. The Q3Q seasonally adjusted GDP for the year to end-September was -1.2% instead of the anticipated 1.2% and the previous 3.5%. After a delayed reaction, USD/JPY cracked higher after the news, moving above 140.60. Crude oil fell lower overnight after the Organization of the Petroleum Exporting Countries (OPEC) again cut its demand forecast for the fourth quarter. WTI futures fell to $85 bbl while Brent futures were below $93 bbl. Gold has held onto overnight gains, trading above $1,770 at the time of going to press. The RBA minutes were out today and revealed that the bank considered a 25 or 50 basis point rate hike at their meeting 2 weeks ago. They raised 25bps then but going forward they said they are ready to pause or go back to big increases depending on the data at that point. After the UK jobs data, there will be EU GDP figures followed by US PPI.

EUR/USD TECHNICAL ANALYSIS

EUR/USD has been cutting through resistance this week as it attempts to overcome a series of breakpoints and the August peak at 1.0369. This level may continue to offer resistance. Further up, the 200-day Simple Moving Average (SMA) could offer resistance at 1.0428. The recent rally broke above the upper band of the Bollinger Band based on the 21-day simple moving average (SMA). A close back inside the band could signal a pause in the bullish move or a potential reversal. Support could be found at breakpoints at 1.0198, 1.0094 and 1.0090. The latter coincides with the 10-day SMA.

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Euro, EUR/USD, US Dollar, Fed, China, Hang Seng, USD/JPY, Crude Oil, RBA - Talking Points

  • The euro appears to be in a holding pattern since last week's rise
  • The Fed remains vigilant, but USD and Treasury yields are fairly stagnant
  • China-US relations appear to be improving. Will that boost the USD, hurt the Euro?
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