EUR/USD hourly chart
Looking at the near-term chart, buyers are starting to exert more control as they hold the break above the 100 (red line) and 200-hour (blue line) moving averages. The high for the day clips 1.0859 and it comes after a beat in German Q3 GDP alongside higher state inflation readings.
But let’s take a step back, does that change the equation for the ECB?
I would say not so much. They moved as a precaution in October to not fall behind the curve. And unless the economy continues to surprise to the upside in the months ahead, they will still feel compelled to act again in December.
They’ve already preempted that by saying that the disinflation process will have bumps along the way, with higher price pressures slated for year-end. And we’re already seeing that from the Spanish and German inflation numbers for October.
So, they have that caveat to fall back on if they are to move by 25 bps again in December.
Going back to EUR/USD, the nudge higher now draws in large option expiries at 1.0850. So, keep that in mind as a potential area in limiting price action before US trading. Besides that, the daily chart also underscores another key level.
EUR/USD daily chart
And that is the 200-day moving average (blue line) at 1.0868. Keep below that and sellers will continue to stay in control in the bigger picture.
As such, it is now over to the dollar side of the equation to really provide the next test for EUR/USD. And we won’t have to wait too long with the US ADP employment roulette potentially one to offer some impact. But otherwise, the key levels above are the ones in play for the time being.