- The euro consolidates around 1.1640 after the rejection from 1.1665.
- The pair loses steam as the appetite for risk diminishes.
- EUR / USD: A failure at 1.1750 could send the pair down to 1.1495 – SocGen.
The EUR has ended a three-day recovery and continues to move back and forth between 1.1630 and 1.1650, after retreating from the session highs of 1.1665 reached during Thursday’s Asian session.
Risk aversion weighs on the euro
The EUR / USD pair is looking for direction, with the US dollar strengthening and most equity markets trading in the red as the spike in risk seen earlier this week has cooled off. With supply chain disruptions back on the table, investors are looking for safety in the US dollar and Japanese yen to the detriment of riskier currencies like the euro.
Corporate earnings, one of the main triggers for risk appetite in the past two days, disappointed on Thursday, and tech giant IBM posted weaker-than-expected quarterly results.
The macroeconomic calendar has been sending mixed signals on Thursday. Weekly US jobless claims have fallen to their lowest levels in 19 months, with 296,000 new applicants last week, and existing home sales rose 7.0% to 6.29 million in September, the best reading since January. On the other hand, the Philadelphia Fed manufacturing survey fell to 23.8 from 30.7 in the previous month in yet another evidence that supply bottlenecks are dragging down industrial activity.
EUR / USD: A failure at 1.1750 could send the pair down to 1.1495 – SocGen
According to the Société Générale currency analysis team, the pair should rise above 1.1750 to confirm the recovery: “EUR / USD has rebounded from 1.1525 and could head towards a multi-month descending channel at 1.1750 (…). results in a further retracement towards the March 2020 peak of 1.1495 / 1.1450 ”.