Eurusd Trades Higher As Greenback Struggles

 Eurusd Trades Higher As Greenback Struggles

EUR/USD Trades Near 1.0600 As Greenback Faces Selling Pressure

It appears that the EUR/USD pair is now trying to form a base between 1.0500 to 1.0550. If the pair succeeds in forming a strong support near this zone, the chances of crossing the 1.06 handle once again will increase tremendously.

The recent buying interest in the single currency is mainly due to Germany's GDP numbers for the 2nd quarter. The GDP numbers of Germany were better than expected & thus allowed the EUR to gain strength against its counterparts.

At the same time, the US Dollar is facing some selling pressure as the DYX is now trading near 106.40. According to experts, the US yields are showing signs of exhaustion, which is also showing its effect on the US Dollar index.

US Economy Remains Resilient

The majority of the market players believe that the Fed's stance will stay consistent at the upcoming meeting. This means the 1st November meeting will not render any change to the interest rates in the USA.

At the same time, the markets believe that high inflation and a resilient US economy mean the chances of a rate hike in December are still high.

If we look at the ECB's side, the meeting on 26th October rendered no change to the interest rate policy as well. According to the ECB's president, more efforts are needed from the central bank to bring down the inflation in the Euro area.

As for the inflation, the ECB officials made it clear that higher inflation is here to stay for a long period of time. Last but not least, Lagarde also pointed out that the economic outlook is facing downside risk from multiple fronts.

So, even if the single currency is trying to find support near 1.0500 - 1.0550, the long-term picture doesn't favor the EUR. After all, the decisions from the respective central banks will play a key role in the EUR/USD direction as compared to technical indicators.

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