- EURUSD bears are watching for a break of the key daily trend line support of the critical resistance zone.
- Dollar bulls are moved by the Fed’s outlook, which is hawkish.
The EURUSD it is struggling, down 0.5%, having fallen from a high of 1.0406 to a low of 1.0305. US Treasury yields rose on Thursday as investors bet on a relatively hawkish Federal Reserve.
The dollar has come under pressure in recent days as inflation data from last week and this week disappointed expectations. This had fueled expectations of a Fed pivot, while some of the Fed’s comments accompanying the data hinted that it may soon slow the pace of its interest rate hikes. However, a change in sentiment on Thursday led to a bid in the dollar again.
Other Fed officials, such as Raphael Bostic, Michelle Bowman, James Bullard, Philip Jefferson, Loretta Mester and Neel Kashkari were due to speak towards the end of the week. To start the day, the Fed’s Bullard said that policy is not entering a tight enough range and that hikes to date have had only a limited effect on observed inflation. He also said that the signs of disinflation are tentative at best, but that he is hopeful by 2023. He believes that the level minimum of the restrictive policy is between 5% and 5.25%.
Dollar bulls enter the scene
Consequently, the start of the day was bearish, with US stocks lower, US yields higher and a firmer dollar. The Dollar Index (DXY), which measures the currency against six major pairs, recently rose 0.50% to 106.81 in midday trading. The index has moved between a range of 106,098 and 107,240 on the day. However, the index remains in bearish territory as long as it is below 107.00. After hitting a 20-year high in late September, the index had lost more than 8% when it hit its latest intraday low on Tuesday.
EURUSD and DXY Technical Analysis
The daily chart shows the price below a key trend line and within an M formation. However, the correction is underway. As long as it is below 107.00, the outlook remains bearish, but a break there opens up the risk of a deeper correction towards 108.80.
This leaves the outlook for EURUSD correctively bearish below 1.0270:
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
