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According to the latest currency news headlines, short-term sentiment towards the Euro appears slightly downbeat against the US Dollar. While both economies face inflationary headwinds, recent data surprises have painted a relatively weaker picture for the Eurozone bloc.
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German industrial orders came in lower than forecast in the latest monthly report, underscoring the challenges manufacturers continue to face from high energy costs and supply chain disruptions. Additionally, French GDP growth slowed more than anticipated in Q3, raising concerns that the second largest Eurozone economy may be slowing.
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Comments from ECB officials at regional central bank conferences this week reiterated the bank's commitment to further tightening of monetary policy in the coming months. However, they maintained a cautious stance, stressing that future rate decisions will depend heavily on incoming economic data. This leaves the policy path somewhat uncertain compared to the more hawkish Fed.
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In contrast, US jobless claims came in above expectations last week, pointing to underlying resilience in the labor market. This boosted views that the Federal Reserve remains on track to deliver another supersized 75 basis point rate hike at its November meeting. Fed speakers struck a firm tone that inflation must be cooled through forceful rate actions.
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Looking at Eurusd technicals, downside momentum has held above 1.0300 for now. However, near-term rallies continue facing resistance below 1.0500 on cautious short-term sentiment. The outlook could brighten if upcoming Eurozone data surprises higher or there are signs inflation is moderating more quickly than expected. But for now, traders appear to favor positioning for dollar strength on a short-term basis.
Technical key aspects of the short term trend and best entry/exit strategy based on the analysis provided in the TradingView charts:
- The short term trend of EURUSD across the timeframes analyzed (weekly to 4H) remains bearish. Price action has been declining within descending resistance lines and channels.
- Best entry for short trades was suggested to be after a bounce from resistance levels or pullbacks from oversold/oversold levels on indicators like the BB bands. This reduces risk of entering at highs.
- Given volatility in currency pairs, optimal stop loss placement would be above recent swing highs or structural resistance levels, around 20-30 pips above entry to limit downside risk.
- Initial profit targets were identified as lower support levels, around 50-100 pips below entry. This provides a favorable risk-reward ratio of at least 1:2.
- Additional extended profit targets aligned with longer term analysis include monthly or weekly demand zones and support levels offered by structural patterns like descending channels over 100-200 pips lower.
- Traders are advised to exit parts of their position at initial targets and move stops to breakeven on the rest, as well as trail stops closer as the trade moves in their favor, to lock in profits and limit risks of unexpected reversals.
