EUR / USD reversal from 1.1665 extends to session lows of 1.1620

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  • The euro falls further and reaches session lows near 1.1600.
  • The USD reaffirms itself in the face of inflationary fears.
  • EUR / USD Expected to Return Below 1.1600 – Scotiabank.

The EUR has extended its reversal from week highs at 1.1665 to hit new session lows at 1.1600 during the last session on Thursday in the United States. The pair EUR/USD it is cutting gains, after a three-day rally, weighed down by higher demand for USD amid more bitter market sentiment.

The US dollar recovers on inflation concerns

The common currency has been trading on a mellow tone as the risk rally seen in previous days waned. Quarterly earnings have failed to lift spirits and concerns about rising inflation and supply chain disruptions have returned to the limelight, driving demand for safe assets against riskier currencies like the euro.

Additionally, US Treasury yields have resumed their rally, with the US 10-year yield hitting 4-month highs at 1.68%. The market is assuming that persistently high inflation will force the Federal Reserve to accelerate its monetary policy normalization plan, which has provided additional support to the dollar.

On the macro front, US data has been mixed. Weekly jobless claims have fallen to their lowest levels in 19 months and existing home sales rose 7.0% to 6.29 million in September, the highest reading since January. On the other hand, the Philadelphia Fed manufacturing survey fell to 23.8 from 30.7 in the previous month.

EUR / USD: seen to return below 1.1600 – Scotiabank

Scotiabank’s currency analysis team, the pair is expected to fall further on Friday, to end the week below 1.1600: “Friday’s release of preliminary Eurozone PMIs likely to reflect the impact of higher prices. of energy in the region. However, with the generally expected hit to manufacturing, only a large data loss could cause the EUR / USD to drop below the key level of 1.16. (…) The intraday low of ~ 1.1635 is the support followed by 1.1600 / 15. Resistance is 1.1665 / 85 “.

Technical levels

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