EUR/USD Recovery Eyes Former Support Zone Around April Low

Euro Outlook: EUR/USD

EUR/USD trades to a fresh weekly high (1.0580) even as the US Personal Consumption Expenditure (PCE) Price Index revels persistent inflation, but the recovery in the exchange rate may turn out to be temporary if it struggles to trade back above the former-support zone around the April low (1.0601).

EUR/USD Recovery Eyes Former Support Zone Around April Low

The recent rebound in EUR/USD seems to be unfazed by the PCE report, which showed the headline reading climbing to 2.3% in October from 2.1% per annum the month prior, while the core PCE, the Federal Reserve’s preferred gauge for inflation, widened to 2.8% from 2.7% during the same period.

Join David Song for the Weekly Fundamental Market Outlook webinar.

David provides a market overview and takes questions in real-time. Register Here

It remains to be seen if the Federal Reserve will respond to the rise in the PCE index as the central bank appears to be on track to further unwind its restrictive policy, but the limited reaction to the US data prints may lead to a further recovery in EUR/USD as the exchange rate extends the recent series of higher highs and lows.

Euro Economic Calendar

At the same time, the update to the Euro Area Consumer Price Index (CPI) may keep EUR/USD afloat as both the headline and core reading is expected to increase in November, and evidence of sticky inflation may push the European Central Bank (ECB) to unwind its restrictive policy at a slower pace in order to achieve its one and only mandate for price stability.

With that said, EUR/USD stage a further advance ahead of the ECB meeting on December 12 should the bullish price series persist, but a softer-than-expected CPI report may drag on the exchange rate as it fuels speculation for lower interest rates in the Euro Area.

EUR/USD Chart – Daily

Chart Prepared by David Song, Strategist; EUR/USD on TradingView

EUR/USD may stage a larger recovery over the remainder of the month as it continues to carve a bullish price series, with a break/close above the 1.0580 (78.6% Fibonacci extension) to 1.0610 (38.2% Fibonacci retracement) region raising the scope for a move towards 1.0660 (61.8% Fibonacci extension).
Next area of interest comes in around 1.0710 (50% Fibonacci extension) but the rebound in EUR/USD may unravel should the former-support zone around the April low (1.0601) act as resistance.
Lack of momentum to close above the 1.0580 (78.6% Fibonacci extension) to 1.0610 (38.2% Fibonacci retracement) region may push EUR/USD back towards 1.0480 (100% Fibonacci extension), with a breach below 1.0370 (38.2% Fibonacci extension) bringing the monthly low (1.0333) on the radar.

Additional Market Outlooks

US Dollar Forecast: GBP/USD Still Vulnerable to Test of May Low

NZD/USD Rebounds Ahead of 2023 Low with RBNZ Expected to Cut

US Dollar Forecast: USD/CAD to Face Uptick in US PCE Index

Gold Price Stages Five-Day Rally for First Time Since March

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.