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When risk aversion and easing are on the same stage, can EUR/USD still hold up?
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market Analysis]: When risk aversion and easing are on the same stage, can the EUR/USD still hold up?". Hope this helps you! The original content is as follows:
On Thursday (October 9), during the North American session, the EURUSD repeatedly saw action around the 1.1600 mark. Since falling from the high of 1.1819, the exchange rate has fluctuated and weakened; the current gain or loss of the 1.16 integer is becoming a critical point in direction selection.
Fundamentals:
The news this week is not noisy, but it affects pricing one by one. On the one hand, rising uncertainty about the U.S. federal government's shutdown has brought safe-haven buying to the U.S. dollar; on the other hand, France's internal political instability has exerted a structural drag on the euro. The new Prime Minister Sebastian Le Corni resigned at the beginning of the week, and the feasibility of the budget and reform advancement was questioned by the market.
In terms of monetary policy, the minutes of the September FOMC meeting showed that members had differences on the path of interest rate cuts, and were generally dovish; New York Fed President John Williams supported further easing in the xmspot.coming months, saying that inflation is slowly falling and the slowdown in employment momentum is worthy of attention, which has cooled the upward momentum of U.S. bond yields. The minutes of the European Central Bank meeting emphasized that concerns about the uncertainty of the external environment have increased, but there is no urgency to adjust policies in the short term, and the xmspot.committee still has differences in the judgment of inflation risks.
In terms of economic data, Germany's trade surplus expanded to 17.2 billion euros in August, but it was dominated by a 1.3% decline in imports. At the same time, exports fell again by 0.5%, which was mutually verified by the previous industrial output of -4.3% in August, showing that the core manufacturing boom is still weak. Taken together: growth on the euro side is soft and political noise is high; interest rate expectations on the U.S. dollar side are moderate but cash liquidity is still strong, and the fundamentals of the euro against the U.S. dollar are still weak.
Technical aspect:
The current observation window is the 240-minute K-line. The middle track of Bollinger Bands is 1.1667, the upper track is 1.1758, and the lower track is 1.1577; the exchange rate is closeRunning on the lower track, the Bollinger Bands are slightly "open and downward", indicating that the downward trend continues but the space below becomes crowded. At the price level, Bollinger's lower track of 1.1577 forms the first line of defense; if it falls, the bandwidth will passively move downward, and short sellers may try to expand the retracement. On the upside, the middle rail 1.1667 and the near-end resistance 1.1650 overlap to form a dense resistance area. Only by effectively standing firm and not breaking through the backtest can a mean return to the middle rail be formed.
On the momentum indicator, MACD (26,12,9) DIFF-0.0026, DEA-0.0025, histogram -0.0003, the negative values narrowed, typical of "short kinetic energy attenuation has not been reversed"; RSI (14) reported 35.6588, below 40 and above 30, which is weak and not extremely oversold.
Key price distribution: support-1.1577; resistance-1.1650, strong resistance-1.1667, extended resistance-1.1758. If it stands firm at 1.1667, we can discuss the backtest of 1.1758; if it falls below 1.1577, the short trend may gain another "volume lead".
Outlook:
In the short term (a few days), the EURUSD tends to maintain a consolidation market near 1.1600. If the Fed officials' speeches continue to be dovish and French political noise is reduced in stages, the exchange rate may experience a "technical rebound-mean return", with 1.1650/1.1667 as the first target zone; only if the backtest confirms that it does not break through, it is expected to further touch 1.1758. On the contrary, if the shutdown intensifies or the Eurozone data continues to weaken, a fall below 1.1577 will open up the retracement space of a lower platform, and trend trading will once again dominate.
The middle line (several weeks to a quarter) follows two clues: first, the direction of interest rate differentials between Europe and the United States; second, the quality of growth in the Eurozone. If the FOMC cuts interest rates twice this year and the European Central Bank remains unchanged, the convergence of interest rate spreads will be beneficial to the euro but it will be difficult to rewrite the general trend; if industrial momentum continues to stagnate, the fundamental weight of the euro will overwhelm the improvement in interest rate spreads. The base scenario maintains "weak fluctuations and downward range movement": before there is a clear improvement in fundamentals or catalysis by strong policies, it will still be difficult to continue to stand above 1.16; only when RSI returns to 50, MACD crosses the zero axis and is accompanied by a "volume energy breakthrough" pointed to by the expansion of Bollinger Bands width, bulls will have the ability to organize a tradable trend.
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