Euro keeps the erratic performance around 1.0840, focus on EMU data, Fedspeak

• The Euro gives away some gains vs. the US Dollar.
• European stocks open Friday’s session with decent gains.
• ECB’s Christine Lagarde did not comment on monetary policy.

The Euro (EUR) loses some upside momentum against the US Dollar (USD), prompting EUR/USD to trade slightly on the defensive around the 1.0840 zone at the end of the week.

The Greenback, on the other side of the equation, exchanges ups with downs around 104.40 when tracked by the USD Index (DXY) amidst the continuation of the downtrend in US yields across the curve, while speculation that the Federal Reserve (Fed) might start reducing its interest rates around the spring of 2024 remains well on the rise.

It is worth noting that speculation regarding prospective Fed rate reduction has been heightened as a result of weaker-than-expected inflation indicators (CPI and PPI) announced earlier this week. 

In the domestic calendar, final Inflation Rate for the broader euro bloc is expected later in the session.

In the US, Building Permits and Housing Starts will be in the centre of the debate. In addition, FOMC Michael Barr (permanent voter, centrist), Boston Fed Susan Collins (2025 voter, centrist), Chicago Fed Austan Goolsbee (voter, centrist) and San Francisco Fed Mary Daly (2024 voter, hawk) are all due to speak.

Daily digest market movers: Euro remains cautious above 1.0800   

• The EUR looks offered vs. the USD early on Friday.
• US and German yields extend the decline at the end of the week.
• Markets believe the Fed will cut rates in the first quarter of 2024.
• For the time being, investors prefer a prolonged delay by the ECB.
• Speculation of FX intervention continue to swirl around USD/JPY.
• ECB’s Villeroy said an impasse in the hiking cycle was fully justified.
• The US housing sector will be in the limelight later in the session.

Technical Analysis: Euro faces an initial barrier at 1.0900

EUR/USD seems to have embarked on a consolidation theme still below 1.0900 for the time being.

Prior hitting the weekly high of 1.0945 (August 30) and the psychological threshold of 1.1000, the next goal of note for EUR/USD is the November top of 1.0895 (November 16). Further north, the pair might confront the August peak of 1.1064 (August 10) and another weekly high of 1.1149 (July 27), both of which precede the 2023 top of 1.1275 (July 18).

Occasionally, the pair may attempt temporary support at the 55-day SMA at 1.0639, before the weekly low of 1.0495 (October 13) and the 2023 low of 1.0448. (October 15).

Looking at the larger picture, the pair's outlook should remain favourable as long as it stays above the 200-day SMA at 1.0803.