Eur/usd - page 490
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Yesterday the EURUSD went back and forward without any clear direction again but still managed to close in the green however in the middle of the daily range, in addition closed within the previous day range, which suggests being clearly neutral, neither side is showing control.
The pair continues to trade above all three moving averages 10, 50 and the 200-day that are acting as dynamic supports.
The key levels to watch are: a 61.8% Fibonacci retracement at 1.1347 (resistance), 50% Fibonacci retracement at 1.1264, a daily resistance at 1.1237, the 200-day moving average at 1.1203 (support), and a daily support at 1.1097.
The single currency remained close to unchanged against the US dollar during yesterday’s session. After a volatile session the euro left the market with only 4 pips higher. The EUR/USD pair remains limited to the upside by the 4-month resistance at 1.1286.
Eurozone September CPI Inflation Rises To 0.4%, Core Unchanged At 0.8%
According to the flash estimate from Eurostat, the annual CPI inflation rate increased to 0.4% for September from 0.2% in August, which was in line with consensus expectations.
The underlying rate held at 0.8% for the month and was slightly below expectations of an increase to 0.9%. The low core reading illustrates how difficult it will be to meet the ECB inflation target and will be a disappointment to the ECB.
The annual decline in energy prices slowed to 3.0% from 5.6% previously and there is scope for this rate to turn positive within the next few months.
There was a decline in food-price inflation to 0.7% from 1.3% previously, while the inflation rate for industrial goods held at 0.3%.
There was a small uptick in the services-sector inflation rate to 1.2% from 1.1%.
The headline annual rate of 0.4% in the highest since late 2014, but there will be some disappointment over the core rate, which has not increased significantly over the past two years.
From the ECB perspective, relief over a small increase in headline inflation will be offset by concerns over stubbornly low core inflation, which will make it much more difficult for the central bank to push headline inflation much above 1.0% over the next few months unless there is a surge in energy prices.
There will also be some disappointment that the September rate was not higher given that German inflation was above expectations.
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EURUSD rockets to 1.1250 as Deutsche Bank shares rocket
What a difference a few hours makes.
1.1251 the new high after a spate of calming Deutsche Bank stories and reports about their fine and integrity. DB's shares have ripped higher.
Goldies were also out with a report estimating the fine between $3bn and $8bn. and saying that things aren't as bad as people are making out.
EUR/USD Weekly Forecast October 3-7
There was little expectation for volatility in the past week as the recent FOMC meeting has set the tone, and the economic calendar remained light in terms of data significant to the potential of a rate hike in the United States. Inflation data towards the end of the week carried some potential to break EUR/USD lower out of its range, and while there was a positive surprise in the data, the currency pair was seen advancing as news regarding Deutsche Bank drove risk sentiment in the financial markets. Data scheduled for the upcoming week carries a higher probability for a technical break as the latest NFP figures are scheduled for release, and are known to drive volatility to the markets.
Inflation data on Friday came in positive with the core PCE price index rising 1.7% versus a prior reading indicating a rise of 1.6%. While the Greenback failed to gain as news regarding Deutsche Bank dominated the financial markets, the futures markets indicated a sharp rise in the odds of a rate hike by the end of the year. To end the week, the probability of a rate increase by December rose to 61.7%.
The upcoming week stands to further impact rate hike probabilities as the jobs report on Friday will influence the timing of the next rate hike. Following a softer reading in September of 151,000, analysts have set expectations at 171,000 for the data at the end of the week. With recent inflation and labor data showing improvement, and a hawkish stance from the Fed, the risk remains to the downside in EUR/USD from a fundamental perspective. Positioning in EUR/USD, however, indicates a further build in the US Dollar net long, exposing the currency to risk in the event of a large shortfall in data.
Significant positioning shifts have been seen in the latest COT report. In the week to September 27, non-commercials were seen reducing bearish exposure by $1.19bn for a net short of $10.66bn. The net long position in the Greenback was reported to increase for a third consecutive week following notable bearish bets in the Pound, Loonie and Swiss Franc. The net long among non-commercials rose $3.03bn for a net long of $12.43bn.
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