EURUSD Technical Analysis – November-2-2023
In today’s comprehensive EURUSD technical analysis, we will first scrutinize the current economic conditions in Euro zone. Following that, we will meticulously delve into the details of the technical analysis pertaining to the EURUSD pair.
Early November’s Euro Position
As November began, the Euro was trading around the $1.06 mark. This was a critical time for traders who were trying to understand the global economic situation and the direction of monetary policy.
The Federal Reserve, as expected, decided to keep the fed funds rate steady in its November meeting, signaling an end to rate hikes. On the other side of the Atlantic, the European Central Bank (ECB) also decided not to change interest rates in October, marking the first time in over a year that rates remained unchanged. The ECB made it clear that borrowing costs would stay high for some time.
Last month, inflation in the Euro Area dropped more than expected to 2.9%, getting closer to the ECB’s 2% target. However, there are signs that the ECB’s policy of high interest rates is taking a toll on the economy.
Preliminary data showed an unexpected shrinkage in the Eurozone’s GDP by 0.1% in Q3, which was worse than predictions of no change. Germany’s economy also saw a slight decrease of 0.1%. Meanwhile, October’s PMIs indicated that both the services and manufacturing sectors are contracting.
EURUSD Technical Analysis
The EURUSD currency pair has been exhibiting a range-bound trading pattern, oscillating between 1.051 and 1.068 since October 23. A noteworthy observation is the formation of a hammer candlestick pattern on the daily chart, with the pair currently trading above the monthly pivot. However, as the pair remains below the Ichimoku cloud, our focus is on identifying potential selling opportunities.
The RSI indicator has crossed above the level of 50, suggesting that the EURUSD price might ascend to R1 (1.067 resistance). This level presents an attractive entry point for short positions, particularly if the market forms a longwick candlestick, a doji, or a bearish engulfing pattern.
An alternative scenario for short trading in EURUSD involves waiting for the pair to breach S1 (1.049 support). In this situation, the pace of decline in the pair could accelerate, with subsequent targets being S2 (1.042) and S3 (1.032).
Stay tuned for more updates on EURUSD technical analysis and potential trading strategies.
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.