EUR/USD Analysis – November 09, 2021

Weakness in US dollar Underpin EUR/USD

The EUR/USD pair closed at $1.1586 after hitting a high of $1.1595 and a low of $1.1550. The EUR/USD pair continued moving with upward momentum for the third consecutive session on Monday amid the renewed weakness of the US dollar. The US dollar was under pressure on Monday after the US House of Representatives passed a $1.2 trillion spending bill to rebuild the nation’s infrastructure.

This long-awaited legislative victory of the Biden administration was a big step, but as it involved the spending of a massive amount of dollars, it had a little negative impact on the currency, and hence, the rival currencies of the USD started increasing in value, like the EUR, which ultimately pushed the EUR/USD higher in the market.

Overall, the US dollar was weak across the market because the US Federal Reserve failed to meet market expectations and refrained from increasing interest rates at this monetary policy meeting. Second, the $1.2 trillion spending bill; third, the improved risk-on market sentiment; and fourth, the high inflationary pressures surrounding the market. All these reasons kept weighing on the greenback, which ultimately added strength to the riskier currency pair EUR/USD on Monday.

On the data front, at 14:30 GMT, the Sentix Investor Confidence surged to 18.3 against the forecasted 14.9 and supported the single currency Euro, which ultimately added further gains in the EUR/USD currency pair. There was no macroeconomic release from the US side; however, many Fed policymakers gave their remarks on Monday, which had little impact on the US dollar.

The Federal Reserve Vice Chairman, Richard Clarida, said that inflation was well above the target level, not desirable for the bank. If it continued to remain at this level, it would prove an error in the policy. He also stated that these pressures would remain higher than expected this year and refrained from mentioning an interest rate hike.

On the other hand, many central banks worldwide followed in the footsteps of the European Central Bank and pushed back all the expectations of an interest rate hike, which triggered the risk-on market sentiment and helped riskier currencies like the Euro gain strength in the market.

Europe was experiencing supply bottlenecks and higher energy prices, the main reasons behind the higher inflation and a slowdown in economic recovery. However, the European currency was stronger against the US dollar on Monday as there were fewer unfavorable events for the single currency in the market than for the greenback.

Furthermore, the Eurozone finance ministers were attending the Eurogroup meeting to discuss macroeconomic prospects in the region, including inflation, energy prices, and the use of digital euros.

EUR/USD Intraday Technical Levels

Support Resistance

1.1559 1.1604

1.1532 1.1622

1.1513 1.1650

Pivot Point: 1.1577

EUR/USD - Technical Outlook

On Tuesday, the EUR/USD bullish bias continued to dominate the market amid weakness in the US dollar and a strengthening euro. On the technical side, the pair has crossed over the intraday pivot point level of 1.1576 and now it’s facing strong resistance at the 1.1603 level. The closing of candles above the 1.1576 level supports a buying trend in the EUR/USD.

On the bullish side, the violation of the 1.1603 level exposes the EUR/USD towards the 1.1621 level. Further, on the higher side, the violation of the 1.1621 level can lead the pair towards the 1.1647 mark. Conversely, the support stays at the 1.1594 and 1.1576 levels. The MACD and RSI are in support of a buying trend. Thus, the bullish bias dominates over the 1.1576 level and vice versa. All the best!