EUR/USD is on its way to hit $0.9900
Fundamentals & News:
On 18th October 2022, the currency pair EUR/USD started its day at $0.9845. Throughout the day, the forex pair reached a high of $0.9866 and fell to a low of $0.9823. At the time of writing, it is moving at $0.9852, with the momentum being bullish.
The currency pair started this week on a bullish note, and on the first day of the week, it recovered the loss of the previous 6 days and reached a high of $0.9853. On Tuesday, the pair is extending its gains and is expected to reach as high as the $0.9900 level, giving enough room for day traders to benefit from.
Greenback dropped to six day lowest level
Yesterday, the forex market sentiment was improved amid the U-turn on the UK’s Budget combined with the US dollar’s weakness. The new finance minister of the United Kingdom, Jeremy Hunt, abandoned most of the mini-budget of the government. According to some analysts, the GBP has been the major driver of the FX market this month. The surprising change announced by the UK government of ditching the 45-billion pound mini-budget added confidence in the Sterling and weighed heavily on the US dollar. As a result, the greenback started to fall against the basket of six major currencies. Hence, the DXY (US Dollar Index) reached its 6 days the lowest level of 111.92.
Furthermore, the disappointed New York Manufacturing Index from the Federal Reserve Bank of New York also dragged down the greenback and added to the strength of the EUR/USD. The Empire State Manufacturing Index dropped in October to -9.1 against the forecasted -4.3, indicating weak economic health. Therefore, right after the release of this report, the greenback, which was already under pressure due to risk-on market sentiment, started to lose its strength and dropped immediately.
Hawkish ECB Comments
Apart from the weakness of the US dollar, the currency pair EUR/USD was also getting support from the latest comments from ECB Chief Economist Philip Lane. According to him, the rate hikes were necessary to support the economy. The European Central Bank and the US Federal Reserve have been facing pressure to slow down the pace of increasing interest rates. However, such comments from Lane at these times only added fuel to the fire and pushed the EUR higher against its rival currencies.
Meanwhile, the European Economic Calendar will be releasing the Italian Trade Balance, ZEW Economic Sentiment and German ZEW Economic Sentiment on Tuesday, which might affect EUR/USD’s prices today. Additionally, the reports from US Economic Calendar, including the Industrial Production and NAHB Housing Market Index, might also impact the currency pair’s prices.
As per the EUR/USD technical analysis, the currency pair has started to show bullish signals, with RSI surpassing the mid-level and MACD histogram making dense green bars. For the short-term price prediction, the currency pair is expected to rise as high as $0.99538.
Day Traders will keep this level in mind while trading the EUR/USD pair on Tuesday. At the time of writing, the pair is moving at $0.9823, which means traders have enough pips to catch to make a little sum of money. The tip is to stay bullish till the $0.9900 level. And if the price surpasses this level, they might take a short position from this level.