EUR/USD Bulls to Target $1.05 on Euro Area Stats and ECB Chatter

It is a quiet day for the EUR/USD on the economic calendar. Following bullish economic indicators last week, Eurozone industrial production will be in the spotlight today.

Economists forecast euro area industrial production to rise by 0.3% in September versus 1.5% in August. Member states delivered mixed results for September, leaving uncertainty ahead of the stats. In Germany, production rose by 0.6% while sliding by 1.8% in Italy.

While the numbers will likely provide the EUR/USD with direction, we don’t expect any influence on the ECB. Last week, ECB President Lagarde noted that inflation was too high and that more rate hikes would be needed to bring inflation to target.

The market focus on inflation and monetary policy will give ECB members a voice this week. ECB members Fabio Panetta, Andrea Enria, and Luis de Guindos speak.

EUR/USD Price Action

At the time of writing, the EUR was down 0.23% to $1.03284. A mixed start to the day saw the EUR.USD rise to an early high of $1.03502 before easing back.

Technical Indicators

The EUR/USD needs to avoid the $1.0293 pivot to target the First Major Resistance Level (R1) at $1.0494. Hawkish ECB member chatter and better-than-expected industrial production figures would support a return to $1.04. However, market risk sentiment will need to be bullish to support a EUR breakout from the Friday high of $1.03642.

In the case of an extended rally, the bulls will likely take a run at the Second Major Resistance Level (R2) at $1.0494 and $1.05. The Third Major Resistance Level (R3) sits at $1.0696.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0222 into play. However, barring a risk-off-fueled sell-off, the EUR/USD pair should avoid sub-$1.02 and Second Major Support Level (S2) at $1.0092.

The third Major Support Level (S3) sits at $0.9891.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 50-day EMA ($1.00638). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above S1 ($1.0222), S2 ($1.0092), and the 50-day EMA ($1.00638) would support a breakout from R1 ($1.0423) to bring R2 ($1.0494) and $1.05 into view. However, a fall through S1 ($1.0222) would bring S2 ($1.0092) and the 50-day EMA ($1.00638) into play. The 200-day EMA sits at $0.99359.

The US Session

It is a quiet day ahead on the US economic calendar, with no US economic indicators for the markets to consider.

The lack of stats will leave the markets to react to the US mid-term election results, Fed chatter, and updates from the G20.

With the probability of a 75-basis point December rate hike sliding to 19.4%, hawkish Fed chatter could catch the markets by surprise. FOMC members Waller and Brainard speak today.