Market Summary:
- EUR/USD is trading around 1.1735, down from weekly highs above 1.1800.
- The pair reversed 0.6% on Wednesday, driven by:
- Weak Eurozone economic data
- Cautious Federal Reserve (Fed) rhetoric
- Market focus now shifts to the final US Q2 GDP reading and a series of Fed speakers.
Eurozone Economic Data:
- Germany GfK Consumer Confidence (October):
- Actual: -22.3
- Forecast: -23.3
- Previous (revised): -22.5
- Follows weaker-than-expected IFO Business Climate Index:
- Fell to 87.7 in September (vs. 89.3 expected)
- Economic expectations and current conditions also deteriorated
Federal Reserve Commentary:
- San Francisco Fed President Mary Daly:
- Open to easing but stressed balancing inflation and employment
- Hinted at a delayed rate cut, possibly not until 2025
- Fed Chair Powell emphasized a slow and cautious approach to rate cuts
- Market reaction: USD strengthened on reduced expectations of near-term easing
Upcoming US Economic Events (Thursday):
- US Q2 GDP (Final):
- Expected: +3.3% annualized
- Weekly Jobless Claims:
- Forecast: 235K, up from 231K last week
- Fed Speakers:
- Jeffrey Schmid (Kansas Fed)
- John Williams (New York Fed)
- Lorie Logan, Mary Daly, Michelle Bowman, Michael Barr
Technical Analysis – EUR/USD:
- Pair broke trendline support at 1.1750 (from Sept 2 lows)
- Bearish momentum building:
- 4H indicators deeply negative
- Lower high on Tuesday adds to downside risk
Key Levels:
- Support:
- 1.1730 (Sept 22 low)
- 1.1700 (Sept 12 low)
- 1.1660 (Sept 11 low)
- Resistance:
- 1.1750 (former trendline, now resistance)
- 1.1850 (Sept 18–23 highs)
Currency Performance (Daily % Change vs. EUR):
| Currency | % Change vs EUR |
|---|---|
| USD | +0.06% |
| GBP | +0.06% |
| JPY | +0.03% |
| CAD | -0.03% |
| AUD | +0.15% |
| NZD | +0.12% |
| CHF | -0.13% |
EUR showed relative strength only against CHF, while it weakened against most other majors.
Fed & USD FAQ (Simplified for NLP):
What does the Fed do?
- Sets US interest rates to control inflation and support employment.
- Higher rates → stronger USD
- Lower rates → weaker USD
How often does the Fed meet?
- 8 times per year, via the FOMC (Federal Open Market Committee).
What is Quantitative Easing (QE)?
- Fed prints money to buy bonds, increasing liquidity.
- Typically weakens the USD.
What is Quantitative Tightening (QT)?
- Fed reduces bond holdings, draining liquidity.
- Usually strengthens the USD.