EUR/USD Tests Resistance At 1.0000 As The Strong Rebound Continues

Key Insights

• U.S. dollar found itself under pressure at the start of the week. 
• EUR/USD moved towards the psychologically important 1.0000 level. 
• USD/CAD settled back above 1.3500 as traders took some profits after the recent move. 

EUR/USD Tries To Settle Above The Key 1.0000 Level

EUR/USD moved back towards the key 1.0000 level as the strong rebound continued.

Today, Germany released Industrial Production report for September, which indicated that Industrial Production increased by 0.6% on a month-over-month basis, compared to analyst consensus of 0.2%. The report provided some support to the euro.

Traders bet that the ECB will be forced to raise rates aggressively despite recession risks. A move above 1.0000 will open the way to the test of the next material resistance level at 1.0030.

U.S. Dollar Is Losing Ground At The Start Of The Week

U.S. Dollar Index settled below the 50 EMA at 110.85 and is currently trying to settle below the 110.50 level as traders buy riskier assets at the start of the week.

There are no important economic reports scheduled to be released in the U.S. today, so traders will stay focused on general market sentiment ahead of the midterm elections.

It should be noted that Treasury yields keep moving higher at the start of the week, and the yield of 10-year Treasuries is trying to settle above the 4.20% level. A move above this level will open the way to the test of the resistance at 4.30%, which may provide more support to the American currency.

GBP/USD Attempts To Settle Above 1.1450

GBP/USD settled above the 50 EMA at 1.1425 and managed to get above the 1.1450 level amid a broad rebound in riskier assets.

Halifax House Price Index declined by 0.4% month-over-month in October as higher interest rates continued to put pressure on the housing market.

In the near term, GBP/USD dynamics will depend on the  general market sentiment towards riskier assets. Traders will also continue to wait for Britain’s new financial plan, which should be released on November 17. Recent reports indicate that British finance minister Jeremy Hunt will announce 30 billion pounds of spending cuts and 20 billion in tax rises.

USD/CAD Rebounds After Sell-Off

USD/CAD is trying to settle back above the 1.3500 level as traders take some profits off the table after the recent sell-off.

Other commodity-related currencies are also moving lower today. AUD/USD declined towards 0.6450, while NZD/USD pulled back towards the 0.5900 level.

USD/JPY Traders Wait For Catalysts

USD/JPY is stuck near the 146.50 level as traders wait for additional catalysts. The Bank of Japan managed to stabilize USD/JPY in the wide 146 – 149 range. However, its policy remains ultra-dovish while the Fed keeps raising rates, so it remains to be seen whether USD/JPY bears will find enough catalysts to push USD/JPY below the 146 level.

For a look at all of today’s economic events, check out our economic calendar.