EUR/USD - H1
The pair struggled for direction yesterday as markets lacked conviction and risk tones were mixed, but today it slides, as risk-off mood prevailed during the Asia-Pacific session.
This was largely due to increased consumer and factory inflation figures for October in China (1.5% y/y and 13.5% y/y respectively), along with persistent concerns around the country's property market.
From recent Fed commentary, Mr Bullard's remarks for two rate hikes in 2022  seemed to resonate more with investors, as the St. Louis Fed President is not a voter in 2021, but will be a voter next year.
These factors have created demand for the US Dollar - along with a rebound in US 10 Year yields - and have pushed the pair back below its EMA100, making it vulnerable to sub-1.1550 moves – in line with our recent analysis. This will keep the 1.1500-1.1492 area in the spotlight, but a break lower will need a catalyst.
Price action has been inconclusive so far this month and we need to see with what mood will the European markets open, as futures show an effort to shake off the negative undertone that has prevailed so far today. An improvement in sentiment would be supportive for the Euro and may give it a chance to reclaim 1.1600, although a larger recovery that will surpass the downward trend line from September (1.1640-50) seems tough under these conditions.
Today's US CPI Inflation release has the potential to determine the next leg of the move, with conventional wisdom suggesting that higher prints will be good for the USD.
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Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.