Current trend

The EUR/USD pair is correcting upwards against the medium-term downtrend, trading around 1.0870. The single currency strengthened after the publication of October inflation data in the Eurozone: YoY, the consumer price index (CPI) was 2.0% against the forecast of 1.9%, and the core indicator was 2.7% instead of 2.6%. These data refute the doubts of some officials of the European Central Bank (ECB) about the possibility of stabilizing the rate of growth of inflation below the target of 2.0% and reduce the likelihood of the regulator moving to a more serious reduction in the cost of borrowing by 50 basis points.

However, the current growth in quotes seems short-lived, since the fundamental factors that contribute to the slowdown in the pace of monetary policy adjustment in the US are also relevant. The US economy is showing signs of sustainable growth (in the third quarter, according to preliminary data, it was 2.8%), and consumer process are slowing down not as quickly as experts expected (the core price index of personal consumption expenditures was 0.3% MoM against preliminary estimates of 0.2%, and 2.7% YoY instead of 2.6%). Today at 14:30 (GMT 2), October data on the labor market will be presented: if employment turns out to be significantly higher than forecasts, then US Fed officials will have another argument in favor of slowing the pace of interest rate adjustment. Judging by the statistics on the non-farm payrolls published on Wednesday by the company Automatic Data Processing (ADP), where the indicator increased from 159.0 thousand to 233.0 thousand with preliminary calculations of 110.0 thousand, such an option is quite possible.

Most experts still believe that the regulator will reduce the cost of borrowing by 25 basis points next week, but the December reduction in the indicator, as well as the department's plans for 2025, remain uncertain. It is possible that after the November meeting, officials will make a pause in adjusting monetary policy, which will lead to a new strengthening of the American currency and again contribute to the downward dynamics of the EUR/USD pair.

Support and resistance

The price is trying to break through 1.0864 (Murrey level [2/8], the central line of Bollinger Bands), which will allow quotes to return to 1.0986 (Murrey level [4/8]), 1.1108 (Murrey level [6/8]). The key level for the “bears” remains 1.0803 (Murrey level [1/8]), a repeated breakdown of which will ensure a resumption of the decline to the targets of 1.0681 (Murrey level [˗1/8]) and 1.0645 (38.2% Fibonacci retracement).

Technical indicators do not give a clear signal: Bollinger Bands are pointing downwards, MACD is decreasing in the negative zone, and Stochastic is directed upwards, but is entering the overbought zone, which does not exclude an imminent reversal.

Resistance levels: 1.0986, 1.1108.

Support levels: 1.0803, 1.0681, 1.0645.

Trading tips

Short positions can be opened below 1.0803 with targets at 1.0681, 1.0645 and a stop-loss at 1.0870. Implementation period: 5–7 days.

Long positions can be opened from 1.0900 with targets at 1.0986, 1.1108 and a stop-loss at 1.0850.