Euro retreats from earlier highs near 1.1020, looks at German CPI, US GDP

• The Euro fades the initial uptick above 1.1000 against the US Dollar.
• European stocks open Wednesday’s session with decent gains.
• Flash Germany’s CPI, advanced US Q3 GDP Growth Rate next on tap.

The Euro could not sustain another bout of strength past the 1.1000 mark against the US Dollar on Wednesday, prompting EUR/USD to recede to the 1.0990 region in the wake of the opening bell in Europe.

On the flip side, the Greenback remains under pressure and trades without a clear direction around 102.70, managing to bounce off earlier lows in the 102.50-102.45 band when measured by the USD Index (DXY).

The current monetary policy landscape remains unchanged, with investors incorporating the possibility of future interest rate cuts by both the Federal Reserve (Fed) and the European Central Bank (ECB) in the spring of 2024.

On the euro docket, the focus of attention will be on the release of the flash Inflation Rate in Germany for the month of November.

Across the pond, the advanced Q3 GDP Growth Rate will take centre stage along with preliminary Goods Trade Balance figures and the usual Mortgage Applications tracked by MBA, while the release of the Fed’s Beige Book will close the calendar later in the NA session.

In addition, Cleveland Fed Loretta Mester (2024 voter, hawk) is also due to speak.

Daily digest market movers: Euro challenges the 1.1000 region once again

• The EUR alternates gains with losses against the USD.
• US and German yields extend their march south midweek.
• Investors contemplate the Fed reducing its interest rates in Q2 2024.
• Markets expectations place the ECB cutting rates in H2 2024.
• ECB’s Luis De Guindos said banks are delaying passing higher rates to savers.
• BoJ’s Seiji Adachi said a positive wage-inflation cycle is needed to change stance.

Technical Analysis: Euro now looks at 1.1064  

Further upside momentum lifts EUR/USD to new monthly highs near 1.1020 on Wednesday.

The November high of 1.1017 (November 29) is now the EUR/USD’s immediate target, followed by the August top of 1.1064 (August 10) and another weekly peak of 1.1149 (July 27), all of which precede the 2023 high of 1.1275. (July 18).

Meanwhile, any corrective declines should find first support around the crucial 200-day SMA at 1.0814, followed by the temporary 55-day SMA at 1.0671. The weekly low of 1.0495 (October 13) follows next, seconded by the 2023 low of 1.0448 (October 3).

Meanwhile, the bullish outlook for the pair remains unchanged as long as it trades above the 200-day SMA.