EUR/USD Rebounds From 3-Day Lows Despite Market Worries
Alex Boltyan | Dec 07, 2022 02:45PM ET
After two consecutive daily drops, the EUR/USD pair advanced on Wednesday, regaining the 1.0500 mark following supportive Eurozone data. However, the pair pulled back during the New York session as market sentiment deteriorated after Russian President Vladimir Putin said the threat of nuclear war is on the rise.
At the time of writing, the EUR/USD pair is trading at the 1.0520 area, 0.54% above its opening price, while the dollar, measured by the US dollar index (DXY), posts a 0.50% daily loss at around 105.05.
The Euro Zone Gross Domestic Product came in better than anticipated in the third quarter, rising 0.3% QoQ, above the market consensus of a 0.2% increase. The annualized GDP growth was 2.3%, above the 2.1% expected.
Investors' focus remains on next week's FOMC interest rate decision. The WIRP tool suggests that investors favor a 50 bps hike as they are betting on 77% probabilities versus 23% chances of a 75 bps increase. However, the November CPI report could affect expectations when it is released next week.
From a technical perspective, the EUR/USD maintains a short-term bullish bias, according to indicators on the weekly and daily charts. At the same time, the EUR/USD pair trades above its main daily moving averages as the 20- and 200-day SMAs completed a bullish crossover.
On the upside, the EUR/USD's next resistance level could be found at 1.0600, followed by the 1.0700 mark. On the flip side, short-term supports are seen at the 1.0400 level, and the mentioned SMAs crossover at the 1.0380-60 zone. A break below this level could add bearish pressure, exposing the 1.0300 area.
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