Euro advances to six-day highs around 1.0730 ahead of US CPI

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<li><strong>The Euro gathers extra steam against the US Dollar.</strong></li>
<li><strong>European stocks extend the weekly rebound on Tuesday</strong><strong>.</strong></li>
<li><strong>US inflation figures come next on the US docket.</strong></li>
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<p>The Euro (EUR) accelerates its gains against the US Dollar (USD), motivating <a href="https://www.fxstreet.com/currencies/eurusd" target="_blank" rel="noopener"><strong>EUR/USD</strong></a> to advance to six-session highs around the 1.0730 region on Tuesday.</p>
<p>On the other hand, the Greenback drifts lower and revisits the mid-105.00s when measured by the <a href="https://www.fxstreet.com/currencies/us-dollar-index" target="_blank" rel="noopener"><strong>USD Index (DXY)</strong></a> amidst the continuation of the gradual decline from last week’s top around 106.00.</p>
<p>The corrective knee-jerk in the Dollar comes amidst further weakness in US yields across different time frames, always against the backdrop of a persistent discrepancy between recent hawkish statements from the Federal Reserve and investors’ views suggesting a prolonged pause in the Fed’s normalization program.</p>
<p>Around the <a href="https://www.fxstreet.com/macroeconomics/central-banks/ecb">European Central Bank</a> (ECB), recent views from Council members keep pointing to a prolonged pause of the current restrictive stance as inflation continues to run hot and well above the target.</p>
<p>Further strength for the single currency also came after Economic Sentiment in both Germany and the broader <a href="https://www.fxstreet.com/economic-calendar/country/c9822cb1-6cee-45f4-a9a2-89d136990308">Eurozone</a> improved to 9.8 and 13.8, respectively, for the current month. Still around the euro bloc, another revision saw the <a href="https://www.fxstreet.com/economic-calendar/united-states">GDP</a> Growth Rate contract 0.1% QoQ in Q3 and expand 0.1% over the ast twelve months.</p>
<p><a href="https://editorial.fxstreet.com/miscelaneous/Screenshot%202023-11-14%20at%2012.17.57-638355574803604756.png" target="_blank" rel="noopener"><img decoding="async" src="https://editorial.fxstreet.com/miscelaneous/Screenshot%202023-11-14%20at%2012.17.57-638355574803604756.png" style="width: 758;height: 326;" /></a></p>
<h2>Daily digest market movers: Euro consolidates rebound beyond 1.0700 </h2>
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<li>The EUR breaks above the key 1.0700 mark against the USD.</li>
<li>Further decline looks favoured in both US and German yields.</li>
<li>Investors anticipate that the Fed will not raise interest rates in December.</li>
<li>The ECB appears to have reached a stalemate in its tightening cycle.</li>
<li>Fears of FX intervention keep hovering around USD/JPY.</li>
<li>US Inflation Rate will be the salient event later in the session.</li>
<li>UK labour market report surprised to the upside.</li>
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<h2>Technical Analysis: Euro shifts attention to 200-day SMA</h2>
<p>EUR/USD maintains the constructive stance and breaks above the key 1.0700 hurdle on Tuesday.</p>
<p>EUR/USD may return the November high of 1.0754 (November 6) before hitting the 200-day Simple Moving Average (SMA) at 1.0801 and the weekly top of 1.0945 (August 30) if the recovery continues. The psychological threshold of 1.1000 is followed by the August peak of 1.1064 (August 10) and another weekly high of 1.1149 (July 27), both of which precede the 2023 top of 1.1275 (July 18).</p>
<p>If sellers retake control, the pair may find temporary resistance at the 55-day SMA at 1.0637, ahead of the weekly low of 1.0495 (October 13) and the 2023 low of 1.0448. (October 15).</p>
<p>Additional decline in the pair is expected as long as it continues to trade below the 200-day SMA.</p>
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<h2>ECB FAQs</h2>
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<p>The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region.<br />The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa.<br />The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.</p>
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<p>In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro.<br />QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.</p>
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<p>Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.</p>
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<br /><a href="https://www.fxstreet.com/news/euro-extends-the-rebound-past-10700-prior-to-emu-data-us-cpi-202311140938">Source link </a></p><p>The post <a href="https://forextraderhub.com/euro-advances-to-six-day-highs-around-1-0730-ahead-of-us-cpi.html">Euro advances to six-day highs around 1.0730 ahead of US CPI</a> first appeared on <a href="https://forextraderhub.com">Forex Trader Hub</a>.</p>