- Euro pulls back below 0.9850 after failure at 0.9880.
- The positive market sentiment has acted as a tailwind for the euro.
- EUR/USD correction is limited below 0.9980/1.0000 — ENG.
The eurodollar’s recovery from last week’s lows at 0.9635 has run out of steam just below 0.9900 and the pair has pulled back as far as 0.9850 in the American session on Tuesday afternoon. However, the euro remains moderately positive on the daily chart.
The euro, favored by risk appetite
The common currency managed to extend gains in the early European session, taking the pair to session highs of 0.9875. European and US stock markets have advanced for the second day in a row, as enthusiasm over the UK’s pivot on the tax cut plan is offsetting concerns about the deteriorating global economic outlook.
The mixed report from the German ZEW, which has shown better than expected sentiment readings in Germany and the Eurozone, while the view of the current situation has deteriorated more than expected, has not dented the recovery of the euro.
In the US, a brighter-than-expected industrial report has offered some breathing space for the dollar. Industrial production increased by 0.4% in September, beating expectations for a 0.1% increase, while capacity utilization reached a level of 80.3% against the market consensus of 80.0%.
EUR/USD correction will be capped at 0.9980/1.0000 — ING
ING Currency Analysts see the current euro rally as a mere correction, expected to be capped below 1.0000: Energy shock temporarily entering reversal as European Gas prices fall sharply due to to warmer weather as European governments have largely achieved their gas storage targets (…) “A quiet week for US data (only US soft housing) creates a corrective window for EUR/USD, where an obvious target is the top of this year’s bearish channel around the 0.9980/1.0000 zone. We would assume this continues to hold the correction.”
Technical levels to watch
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
