EUR/USD Extends Correction as U.S. Dollar Rebounds

Published 11/29/2022, 05:20 PM
Updated 07/09/2023, 06:32 AM

The shared currency is edging lower on Tuesday despite Germany reporting soft inflation figures from November while the greenback stages a broad-based recovery, dragging the EUR/USD pair to a six-day low of 1.0319.

At the time of writing, the EUR/USD pair is trading at the 1.0330 area, 0.10% below its opening price, extending its pullback from a five-month peak of 1.0498 struck on Monday.

On the data front, the German Consumer Price Index, harmonized to compare with other European countries, increased by 11.3% in the twelve months to November, below the previous reading of 11.6% and matching the market’s expectations.

On Monday, European Central Bank president Christine Lagarde noted that she does not see evidence of inflation reaching its peak in the euro area, so these figures could play a significant role in the Governing Council’s economic assessment and interest rate decision at their December meeting.

Other data showed Business Climate for November came in at 0.54, while the Consumer Confidence indicator printed -23.9, in line with consensus.

EUR/USD daily chart.

From a technical perspective, the EUR/USD maintains its short-term bullish outlook according to indicators on the daily chart, although they lost momentum after the last session’s pullback.

On the upside, the EUR/USD needs to secure the 200-day SMA currently at 1.0370, looking for an extension to the 1.0500 area en route to 1.0600. 

On the other hand, short-term supports are seen at the 1.0300 level, followed by 1.0240, 20-day SMA, and last week’s lows at around 1.0220.

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