EURUSD Stays On the Upside As the Dollar Looks to PCE Numbers For A Fightback

Summary:
• The Eurozone's strong economic data and weak US data have combined to put EURUSD on the ascending trajectory. But there's more at play.

EURUSD rose for the third successive session on Wednesday, supported by strong Eurozone data and soft US data. The currency pair traded at 1.0821 at the time of writing with a marginal 0.03 percent gain on the daily chart, having subsided from a seven-session high of 1.0859. An extension of gains above the psychological support at 1.0800 is significant for EURUSD, having declined by 2.9 percent in the last month.

With its weekly gains at 0.2 percent, the currency pair is building traction for further upside ahead of a Fed interest rate decision making in the next week. The latest US macroeconomic figures have raised the prospect of two more rate cuts before the year ends. Furthermore, the outcome of the November 5 elections will have a bearing on the dollar’s strength.

The Eurozone economy grew by 0.9 percent year-on-year in Q3, beating median forecast figure of 0.8 percent. The quarter-on-quarter growth came in at 0.4 percent, exceeding analysts’ forecast of 0.3 percent. The two largest economies in the Eurozone, Germany and France, had their third quarter growth above median forecasts by 0.3 percent and 0.1 percent respectively. In Germany’s case, that was a growth of 0.2 percent against the forecast contraction of -0.1 percent.

Meanwhile, the US dollar is under pressure after the JOLTS Job Openings figures came in at 7.443 million in September, missing the forecast mark of 7.843 million. That does not augur well for the US economy and will keep the greenback suppressed. Meanwhile, yields on benchmark 10-year US treasury bonds declined by 2 basis points to 4.254, adding tailwinds to EURUSD. Looking ahead, October Personal Consumption Expenditure (PCE) numbers set for release on Thursday will define the pair’s bearing heading into the weekend.

EURUSD prediction

EURUSD pivots at 1.0807, and the upside will prevail if the pair stays above that level. The first resistance will likely be at 1.0826, but an extended upward push could break above that level to test 1.0840.

Alternatively, moving below 1.0807 will signal control by the sellers. In that case, the first support could come at 1.0795. However, if the sellers strengthen their omentum, EURUSD could break below that level and render the upside narrative invalid. Also, the pair could go on to test 1.0778.