Current flow

During the Asian session, the EUR/USD currency pair traded in a bearish trend, holding around the 1.0550 level: the European currency tried to regain the previously won positions with the support of stable macroeconomic reports.

Therefore, the October EU consumer price index added 0.3%, justifying the initial estimate, and consolidated around 2.0% YoY, which compared to the increase in inflation in some individual countries in the region, is certainly a positive factor for the euro. On the other hand, the core indicator excluding food and fuel costs from the calculation, also remained at the September level of 2.7%, confirming that the European Central Bank's (ECB) long-term "hawkish" monetary policy has proved effective. Over the past four meetings, the regulator has already cut interest rates from 4.50% to 3.40% and is likely to cut borrowing costs further at its meeting on December 12, bringing the value closer to 3.00% for the first time since February 2023. Investors also gave attention to the dynamics of the German producer price index, which was adjusted from -0.5% to 0.2% MoM instead of the expected –0.1% and from –1.4% to –1.1% YoY.

The American dollar is recovering losses, developing an uptrend around 106.6 points in the USD Index during morning trading. Earlier this week, the currency lost a bit after a decline in the real estate market, where building permits fell to 1.416 million from 1.425 million previously, housing starts to 1.311 million from 1.353 million a month earlier. However, data on the loan market presented yesterday changed investor sentiment: the Mortgage Bankers Association (MBA) index added 1.7% after a previous correction of 0.5%, and the mortgage market indicator reached 195.6 points from 192.4 points.

Support and resistance

On the daily chart, the instrument is correcting and moving away from the neckline of the head and shoulder reversal pattern, which is at the 1.0660 level.

Technical indicators have long reversed and actively strengthened the signal to open a sell position: the fast EMA on the Alligator indicator is held below the signal line, expanding the fluctuation range, and the histogram of the AO oscillator is forming a new correction bar, falling in the sell zone.

Support levels: 1.0480, 1.0260.

Resistance levels: 1.0610, 1.0780.

Trading tips

A sell position can be opened after the price consolidates below the support level of 1.0480, with a target at the level of 1.0260. The stop loss is at the level of 1.0540. Implementation period: 7 days or more.

A buy position should be opened after the price consolidates above the resistance level of 1.0610, with a target at the level of 1.0780. The stop loss is at the level of 1.0550.