Euro prints new tops and trades closer to 1.0700

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<li><strong>The Euro flirts with the 55-day SMA against the US Dollar.</strong></li>
<li><strong>European stocks keep the positive price action on Tuesday.</strong></li>
<li><strong>Eurozone flash Inflation Rate saw the CPI retreating further in October.</strong></li>
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<p>The Euro (EUR) keeps the optimism well and sound in the first half of the week against the US Dollar (USD), lifting <a href="https://www.fxstreet.com/currencies/eurusd" target="_blank" rel="noopener"><strong>EUR/USD</strong></a> to new five-day highs in the proximity of 1.0675 on Tuesday, an area also coincident with the temporary 55-day SMA.</p>
<p>On the other side of the equation, the Greenback comes under extra downside pressure and forces the <a href="https://www.fxstreet.com/currencies/us-dollar-index" target="_blank" rel="noopener"><strong>USD Index (DXY)</strong></a> to pierce the key support of 106.00 amidst a broad-based improvement in the <a href="https://www.fxstreet.com/technical-analysis/sentiment/risk-appetite">risk appetite</a>. The persistent decline in the Greenback comes in tandem with an equally weak tone in US yields across the curve.</p>
<p>In the context of monetary policy, there is a growing agreement among market participants that the Federal Reserve (Fed) is likely to maintain its current position of keeping interest rates unchanged at Wednesday&#8217;s meeting. Nonetheless, there is a possibility of a rate adjustment in December, which appears to be supported by the continued strength of the US economy and still-high inflation levels.</p>
<p>In the domestic calendar, Retail Sales in Germany contracted 4.3% in the year to September. In the broader Eurozone, advanced Inflation Rate for October saw the CPI rising 2.9% YoY, while flash Q3 Gross Domestic Product (GDP) Growth Rate expect the economy to contract 0.1% QoQ and expand 0.1% YoY.</p>
<p><a href="https://editorial.fxstreet.com/miscelaneous/Screenshot%202023-10-31%20at%2011.48.50-638343461339452160.png" target="_blank" rel="noopener"><img decoding="async" src="https://editorial.fxstreet.com/miscelaneous/Screenshot%202023-10-31%20at%2011.48.50-638343461339452160.png" style="width: 744;height: 369;" /></a></p>
<p>In <a href="https://www.fxstreet.com/economic-calendar/united-states">the US data</a> space, the Employment Cost index is due, seconded by the FHFA House Price Index and the key Consumer Confidence measured by The Conference Board.</p>
<h2>Daily digest market movers: Euro rebounds further and retargets 1.0700  </h2>
<ul>
<li>The EUR trades with decent gains against the USD.</li>
<li>US and German yields are poised to resume the downside.</li>
<li>The Fed could still hike rates by 25 bps in December.</li>
<li>The ECB is expected to maintain its monetary policy <em>impasse</em> until H2 2024.</li>
<li>Geopolitical concerns in the Middle East remain unabated.</li>
<li>The BoJ tweaked its YCC programme at its meeting earlier on Tuesday.</li>
<li>Chinese PMIs surprised to the downside in October.</li>
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<h2>Technical Analysis: Euro sees its downside bias mitigated above 1.0700</h2>
<p>EUR/USD extends the positive price action further north of the 1.0600 hurdle on Tuesday.</p>
<p>Next on the upside for EUR/USD comes the interim 55-day Simple Moving Average (SMA) at 1.0669 prior to the October peak of 1.0694 (October 24). The breakout of this level exposes the weekly top of 1.0767 (September 12) ahead of the crucial 200-day SMA at 1.0809, while another weekly high of 1.0945 (August 30) comes before the psychological barrier of 1.1000. Beyond this region, the pair may encounter resistance at the August peak of 1.1064 (August 10), ahead of the weekly top of 1.1149 (July 27) and the 2023 high of 1.1275 (July 18).</p>
<p>The resumption of the bearish mood could drag the pair to the weekly low of 1.0495 (October 13), ahead of the lowest level in 2023 at 1.0448 (October 15), and the round number of 1.0400.</p>
<p>The pair&#8217;s <a href="https://www.fxstreet.com/rates-charts/forecast">outlook</a> is predicted to continue bearish as long as it remains below the crucial 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-climbs-to-multi-day-highs-near-10650-ahead-of-key-emu-data-202310310931">Source link </a></p><p>The post <a href="https://forextraderhub.com/euro-prints-new-tops-and-trades-closer-to-1-0700.html">Euro prints new tops and trades closer to 1.0700</a> first appeared on <a href="https://forextraderhub.com">Forex Trader Hub</a>.</p>