EURUSD:
The euro is strengthening toward the 1.17 area as the US dollar softens: market participants note a decline in the dollar index and cautious expectations for the Federal Reserve’s next steps, while the release of several US macro indicators has been delayed by the budget standoff. As a result, risk appetite is rotating toward European currencies and the USD is surrendering part of its safety premium. At the time of writing, spot quotes confirm movement around 1.1700–1.1710, indicating a short-term fundamental impulse in favor of the euro.
Additional support for the euro comes from the euro area agenda: investors are watching final inflation readings and remarks from ECB officials on price dynamics and economic activity. After a spike in political uncertainty earlier in the month, interest in the euro has partially recovered, while lower US yields have narrowed the rate differential. This makes capital inflows into European assets more likely and improves the balance of factors for the pair versus early October.
On the US side, the focus remains on risks of an economic slowdown and on the Fed’s communication. Signals from some members suggest a readiness to support the economy if demand and labor indicators stay soft, which caps the dollar. Against this backdrop, the tactical scenario is a moderate rise in EURUSD amid headline-driven volatility.
Trading recommendation: BUY 1.1705, SL 1.1685, TP 1.1765.
Origin: FreshForex
