Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst 

The EURUSD has weakened, dipping below the $1.05 mark, reaching its lowest level since November 2022. Investors have been flocking to the US dollar, driven by strong economic data, rising bond yields and the passage of a US funding bill to prevent a government shutdown. This dollar strength is further supported by expectations that the Federal Reserve might deliver one more hike before the end of the year, while the European Central Bank have likely completed its interest rate hikes. 

Despite signs of easing inflation in the Eurozone, with recent data showing a slowdown in September’s inflation rate to 4.3%, albeit remaining above the ECB’s 2% target, concerns about a looming recession in the bloc persist. These factors, combined with the ECB’s less hawkish stance, have contributed to the euro’s recent decline. 

Technical Analysis: 

The EURUSD pair currently stands at 1.04840, as bears aim to maintain short-term control. Price action is trading within a horizontal consolidation zone, awaiting the NFP data. The pair remains below the downward-sloping 20-EMA (green line), 50-EMA (blue line), and 100-EMA (red line). The 100-EMA is positioned above the 20-EMA and 50-EMA. 

The RSI is on the rise, with a reading of 39.76, while the RSI-based Moving Average is falling at 34.86, suggesting mixed momentum. 

Short-term trading opportunities may emerge towards the 1.05062 resistance level if the price action can sustain an upward push. A break above this initial resistance could target 1.05634, with 1.06173 acting as the next significant resistance. Conversely, failure to move higher could provide short-term trading opportunities towards the initial support at 1.04485, potentially leading to tests of the 1.04108 and 1.03569 support levels. 

Summary: 

The EURUSD faces downward pressure as the euro struggles against a stronger US dollar influenced by rising bond yields and economic factors favouring the greenback. The EURUSD pair is currently consolidating within a horizontal range on the 4-hour chart ahead of the NFP report on Friday.  

Short-term trading opportunities may arise based on the pair’s ability to break key resistance and support levels, with the 1.05062 and 1.04485 price levels likely to act as levels of significance in the short term.  

Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire, MT Newswire, EUROSTAT.