This article is a rewritten version of the analysis titled “Morning Briefing: EURUSD Approaches a Key Support,” originally published on FXStreet by our respected contributor, Senorita Evans.
Forex Morning Market Overview – November 17, 2023
(By Senorita Evans, FXStreet – Adapted and Extended)
The global currency markets opened Friday with continued strength in the US dollar, creating downward pressure on several major currency pairs. The dollar’s resilience stems from stronger US economic data, recent hawkish commentary from Federal Reserve officials, and persistent uncertainty about global economic growth. In this detailed morning briefing, we analyze the movements and outlook on major currency pairs like EUR/USD, GBP/USD, USD/JPY, USD/CNY, EUR/JPY, and USD/INR.
EUR/USD Near-Term Outlook
The EUR/USD pair is facing renewed downside pressure as it enters a key support zone. Recent price action highlights a possible halt in the pair’s previous recovery trend from its October lows.
Key Technical Insights:
– EUR/USD is trading near 1.0825, approaching a significant short-term support level around 1.08. A clean break below this area could shift momentum back in favor of the dollar, possibly pulling the pair towards the lower 1.07s and even down to 1.06 in the coming sessions.
– The rebound pressures that had built up over the past two weeks seem to be weakening. Demand has stalled near the 1.0880-1.09 resistance area. For any bullish continuation, price needs to break and stay above the 1.09 handle.
– The 200-day moving average around 1.0840 is being tested once again. Sustained trade below it could reinforce bearish sentiment and attract short positions.
– Momentum indicators, such as the Relative Strength Index (RSI), are rolling over from overbought levels, lending further technical support to a bearish case in the near term.
Fundamental Considerations:
– The US economy continues to outperform its European counterparts, at least for now. Recent US CPI and PPI data reflect stable pricing pressures. While inflation is moderating gradually, it remains elevated relative to the Fed’s 2% target.
– In contrast, the Eurozone is struggling with sluggish growth and lackluster inflation. The ECB has paused rate hikes, and forward guidance suggests little appetite for tightening.
– Diverging monetary policy outlooks strengthen the dollar. Any hawkish updates in US economic indicators will further accelerate EUR/USD downside at these levels.
Looking forward, market participants should watch for any break below 1.08. If sellers dominate, the next downside targets could include:
– 1.0750 – Minor historical support
– 1.0690 – Previous swing low
– 1.06 – Psychological support and potential reversal zone
GBP/USD Rangebound but Bearish Impulse Builds
The pound continues to hover within a restricted trading range against the dollar. However, any bearish movement in the coming sessions could reintroduce downside momentum, particularly if the dollar rallies afresh.
Technical Highlights:
– GBP/USD is currently near 1.2390, above interim support near 1.2350.
– Momentum indicators show waning bullish momentum. A slide below 1.2350 could open a path toward lower supports at 1.2280 and a deeper pullback toward 1.22.
– Resistance continues to hold firm at 1.2420–1.2450. Bulls need a clear break above that zone to re-establish upward momentum.
Fundamental Drivers:
– UK inflation is holding at elevated levels. However, the Bank of England has hinted at the end of its rate-hike cycle, anticipating a gradual cooling in price pressures.
– Weak retail data and concerns about recession risks in the UK are capping any substantial upside in GBP/USD for the moment.
– Traders will look at upcoming UK services and manufacturing numbers to guide expectations for GDP and central
Read more on EUR/USD trading.