The common currency held the lower end of the range and ended higher in the week ended November 05 amid the Fed meeting.
In the week gone by, EURUSD added 0.05% or neutral to close at 1.1565, while the EUR crosses stand tall against the pound, Aussie, and Kiwi dollar. RBA policy setting dragged the Aussie lower, and the Kiwi dollar followed the AUD’s footsteps. Besides, Fed policy settings added more pressure on commodity currencies, especially antipodeans.
Risk on:
Haven currencies Swiss Franc and Japanese Yen outperformed in the G10 basket. Both these currencies gained nearly 2% against AUD and GBP. Whereas against the EUR, the gains were limited to 0.40%. Among the G10 basket, AUD and GBP were the weakest, led by RBA and BoE.
Since it was a central banks week led by the Fed and BoE, currencies traded on the dollar and pound movements but not on their own merits.
Historically observed since 2010, the euro does not show strength in November except 2017 and 2020. Interestingly during these two years, EURUSD rallied more than 2%. We must accept the fact that only the journey is written, not the destination. Since there are not many positive vibes left on the euro, we remain cautious on the medium-term perspective.
Where is EURUSD headed?
EURUSD has entered a consolidation phase and is expected to remain in the same range for the near term. Resistance is expected at 1.1700, while we see bottom fishing around 1.1500.
As long the price closes above the 1.15 mark, we can expect one more impulse to move to 1.1630 levels.
Overall, the consolidation process is expected to continue further. The downside is expected to be restricted to around 1.15 for the time being. Whereas on the higher side, 1.17 will continue to act as a cap for the near term.
This week we will see CPI data for Germany and US and German ZEW economic sentiment.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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