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Should We Be Wary of the Euro's Direction, Given Its Resistance to Further Gains Even Under QT?

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Should We Be Wary of the Euro's Direction, Given Its Resistance to Further Gains Even Under QT?

11.10.2022

Today's Highlights
  1. UK Unemployment Rate
  2. U.S. NFIB Small Business Optimism Index

In U.S. currency trading the previous day, the euro/dollar pair fell slightly as the yield on the 10-year U.S. Treasury note rose to 3.98%, approaching the key 4% level.The EUR/USD pair fell by about 70 pips from 0.9752 to 0.9679. Although it briefly rose above the 20-period moving average on the hourly chart, it ultimately closed lower. It is testing lower levels during today’s Asian session as well, and with momentum suggesting it may break below yesterday’s low, we will be watching closely to see if the decline continues into the European session.

In contrast to the pound, which is undergoing quantitative easing (QE), the euro—which has been facing resistance despite plans to continue quantitative tightening (QT)—declined against the yen. The euro/yen pair is currently trading around 141.151 and appears poised to break below the 200-period simple moving average (SMA) on the 4-hour chart without finding support there.On the daily chart, the EUR/JPY pair is also trading below the 20-day moving average, and with an RSI reversal confirmed, traders should remain cautious of a continued decline.

Today’s schedule includes the UK unemployment rate at 15:00 (Asia time), Turkey’s current account balance at 16:00 (Europe time), the U.S. NFIB Small Business Optimism Index at 19:00 (Europe time), remarks by Bank of England Deputy Governor Kanlif at 24:00 (U.S. time), and the U.S.Mester, President of the Cleveland Fed, at 26:00; a U.S. 3-year Treasury auction at 27:00; remarks by Jordan, Governor of the SNB, and remarks by Kanlif, Deputy Governor of the BOE, at 27:00; and remarks by Ellis, Deputy Governor of the RBA, at 7:00 the following day.We should remain cautious about the direction of the euro, which is facing resistance amid quantitative tightening (QT).

桜井 慶介

Author: Keisuke Sakurai

He has over 10 years of experience in FX trading. In the financial sector, he has been involved in investment management focused primarily on foreign exchange markets and has experience as an asset management advisor. Drawing on his extensive experience, he specializes in technical and fundamental analysis.

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