Euro struggles for direction below 1.0700 ahead of Lagarde speech

• The Euro trades without a clear direction against the US Dollar.
• European equities open on the defensive on Friday.
• ECB President Christine Lagarde speaks later in the session.

The Euro (EUR) keeps trading in a tight range against the US Dollar (USD) on Friday, prompting EUR/USD to gyrate around the 1.0670 level at the end of the week.

The Greenback appears slightly bid, flirting with the key barrier at 106.00, when measured by the USD Index (DXY). Investors continue to digest Federal Reserve (Fed) Chair Jerome Powell’s comments on Thursday, while US yields advance marginally across the curve.

Back to Powell, he confirmed that the Fed is not enthusiastic about raising its benchmark interest rate any further at a time when there is evidence of a gradual reduction in inflationary pressures. He also refrained from ruling out the possibility of another rate hike to help bring inflation closer to the target of 2% and expressed doubts about the effectiveness of the current benchmark rate in consistently achieving the inflation goal.

Later in the session, market participants are expected to closely follow comments from the European Central Bank’s (ECB) President Christine Lagarde in what will be the salient event in the Eurozone on Friday. Lagarde’s speech will come amidst the recent pickup in the hawkish narrative from some rate setters, who seem to favour further tightening in light of current upside risks for inflation in the region.

In the US economic calendar, the advanced print of the Michigan Consumer Sentiment for November will take the centre stage. Dallas Fed President Lorie Logan (voter, hawk) and Atlanta Fed President Raphael Bostic (2024 voter, centrist) are also set to speak.

Daily digest market movers: Euro remains cautious prior to Lagarde remarks 

• The EUR trades below 1.0700 against the USD.
• US and German yields advance marginally on Friday.
• Markets anticipate that the Fed will keep its monetary policy unchanged in December.
• The ECB appears to be considering a long-term pause until H2 2024.
• Geopolitical tensions in the Middle East remain high.
• The RBA’s SoMP leaves the door open to further tightening.
• UK GDP figures surprised to the upside.

Technical Analysis: Euro remains supported by 55-day SMA

EUR/USD maintains the cautious trade in the sub-1.0700 region at the end of the week.

If the selling pressure continues, EUR/USD might initially confront the interim 55-day Simple Moving Average (SMA) at 1.0642 prior to the weekly low of 1.0495 (October 13), and the 2023 low of 1.0448 (October 15).

On the plus side, the November high of 1.0754 (November 6) stands in the way of the 200-day SMA at 1.0801 and another weekly top of 1.0945 (August 30). The psychological level of 1.1000 is oriented north of here, before to the August peak of 1.1064 (August 10) and the weekly high of 1.1149 from July 27. The surpass of the later could pave the way for a move to the 2023 top of 1.1275 seen on July 18.

The pair's outlook remains bearish as long as it trades below the 200-day SMA.