Euro treads water around 1.0570 ahead of Eurozone CPI, Fedspeak

• The Euro trades without direction against the US Dollar.
• Stocks in Europe open Wednesday’s session in a mixed tone.
• EUR/USD alternates ups and downs around 1.0570.
• The USD Index (DXY) looks sidelined in the low 106.00s.
• Eurozone final inflation figures will be in the spotlight later in the session.
• Housing data, Fedspeak take centre stage in the US docket.

The Euro (EUR) navigates a narrow range against the US Dollar (USD), prompting EUR/USD to hover around the 1.0570 zone on Wednesday.

The Greenback keeps the trade in the low 106.00s when measured by the USD Index (DXY) amidst the equally irresolute price action in the global markets, against the generalized cautious stance in light of increasing geopolitical risks.

Continuing to centre attention on monetary policy, investors anticipate that the Federal Reserve (Fed) will uphold its position of not touching interest rates throughout the remainder of the year. Meanwhile, participants in the financial markets contemplate the possibility of the European Central Bank (ECB) halting policy modifications, despite inflation levels surpassing the bank's target and mounting concerns about the potential for an economic downturn or stagflation in the region.

On the domestic calendar, the final inflation rate for September in the broader Eurozone is due later.

Data-wise, in the US, the usual weekly Mortgage Applications tracked by MBA are due in the first turn, while the housing sector is expected to be at the centre of the debate following the release of Housing Starts and Building Permits. In addition, the Fed’s Beige Book and TIC Flows are also due.

Additionally, markets’ attention will also be on speeches by FOMC Governor Christopher Waller (permanent voter, centrist), NY Fed President John Williams (permanent voter, centrist), FOMC Governor Michelle Bowman (permanent voter, hawk), and Philly Fed President Patrick Harker (voter, hawk).

Daily digest market movers: Euro looks for direction around 1.0570

• The EUR trades in a vacillating fashion against the USD.
• US and German yields look poised to extend their march north.
• Markets remain focused on the Fed’s tighter-for-longer stance.
• Investors see the ECB could pause its tightening cycle until Q3 2024.
• The crisis in the Middle East could get worse before it gets better.
• Chinese data surprised to the upside.
• UK CPI rose 6.7% YoY in September, a tad above estimates.

Technical Analysis: Euro faces next up barrier of note at 1.0640

EUR/USD trades in an inconclusive fashion around 1.0570 against the backdrop of a lack of direction in the Greenback.

If the rising trend continues, EUR/USD may revisit the October 12 high of 1.0639, as well as the September 20 top of 1.0736 and the significant 200-day Simple Moving Average (SMA) of 1.0820. A break above this level might signal an effort to break above the August 30 peak of 1.0945 and target the psychological level of 1.1000. Any more gains over the August 10 high of 1.1064 might take the pair towards the July 27 top of 1.1149 and possibly the 2023 peak of 1.1275 seen on July 18.

In the case that selling pressure persists, the 2023 low at 1.0448 from October 3 might be revisited, as well as the major support of 1.0400. If this level is broken, it may pave the way for a retest of the weekly lows of 1.0290 (November 30, 2022) and 1.0222 (November 21, 2022).

As long as the EUR/USD continues below the 200-day SMA, the possibility of continuous bearish pressure exists.