The Euro (EUR) trades with a firm bid bias against the US Dollar (USD), enocuraging EUR/USD to regain fresh upside traction and reclaim area beyond the key barrier at 1.0500 the figure, or two-day peaks, on Wednesday. On the USD-side of the equation, the Greenback breaks below the 107.00 yardstick when tracked by the USD Index (DXY), amidst a mixed performance in US yields across the curve and a marked improvement in the sentiment surrounding the risk-linked galaxy. A look at the monetary policy front notes that the Federal Reserve (Fed) is expected to raise interest rates by 25 basis points (bps) before the end of the year, according to investors. Simultaneously, market talks about a potential stop in policy changes at the European Central Bank (ECB) continue, despite inflation levels above the bank’s objective and mounting fears about a future recession or possibly stagflation in the area.
In the domestic calendar, final Services PMIs in Germany and the euro area came in at 50.3 and 48.7 in September, while Retail Sales in the broader bloc contracted 2.1% in the year to August. In the US data space, the usual weekly Mortgage Applications by MBA dropped by 6% in the week to September 29, while the ADP Employment Change came in at 89K during last month, nearly half of what was expected. Later in the session, final readings of the Services PMI, Factory Orders, and the always-relevant ISM Services PMI are also due. EUR/USD attempts a marked comeback so far on Wednesday, advancing past the 1.0500 region following recent YTD lows near 1.0450 (October 3).
On the downside, the loss of the 2023 low of 1.0448 (October 3) should prompt EUR/USD to meet the next support at the round level of 1.0300 prior to minor support at the weekly lows of 1.0290 (November 30 2022) and 1.0222 (November 21 2022). In case of occasional bullish attempts, the pair should encounter the next up-barrier at 1.0617 (September 29) prior to the weekly high of 1.0767 (September 12), before reaching the crucial 200-day SMA at 1.0825. If the pair breaks beyond this level, it may set up a challenge of the weekly top at 1.0945 (August 30) and the psychological barrier of 1.1000. The surpass of the latter might prompt the pair to test the August peak of 1.1064 (August 10) ahead of the weekly high of 1.1149 (July 27) and the 2023 top of 1.1275. (July 18). However, it is critical to remember that as long as the EUR/USD remains below the 200-day SMA, the possibility of more negative pressure exists.
