The Euro (EUR) is currently trading in the upper 1.14 range against the US Dollar (USD) during Wednesday’s North American session. Recent data from the Euro area shows slight improvements in the services and composite PMIs, which are both above 50. Germany’s readings in the mid-50s are stronger than France’s, which is dealing with political uncertainty.

RSI Overview

Economic factors continue to affect the EUR, but recent changes may not be solely due to yield spreads. Studies suggest a strong connection between the EUR and market sentiment, indicating that traders are reacting to broader trends. The Relative Strength Index (RSI) currently shows a bearish sentiment, sitting in the low 30s, just above the oversold mark of 30. The trend is neutral, as indicated by a steady 50-day moving average and a consistent trading range since June. Bearish momentum seems to be slowing down, with expectations for the EUR/USD to fluctuate between 1.1450 and 1.1550 in the short term. The FXStreet Insights Team provides relevant market analysis from various experts. Their insights are drawn from recognized analysts, giving traders additional viewpoints on market trends without offering personal opinions. Currently, the EUR/USD pair is stabilizing in the mid-1.08 range, following a familiar pattern of range-bound trading. This comes after last month’s decisions by both the European Central Bank and the US Federal Reserve to maintain interest rates, which has led to a lack of immediate market catalysts. Similar to past periods of uncertainty, the market appears to be waiting for a new direction.

Eurozone Economic Update

Recent economic indicators support this sideways trend, with the Eurozone’s October flash composite PMI registering at a modest 49.8. This is the third month in a row below the 50-point mark, showing ongoing economic weakness. Therefore, there is not much fundamental pressure for a significant Euro increase from these levels. For derivative traders, this consolidation phase suggests that selling volatility might be a wise strategy in the upcoming weeks. The one-month implied volatility for EUR/USD has decreased to 5.2%, reflecting a calm market similar to what we saw in late 2023, before unexpected rate hikes. Strategies like short strangles or iron condors centered around the 1.08 level could take advantage of this anticipated inactivity. However, it’s important to stay aware of broader market themes, as low volatility can sometimes mislead traders and may precede a sudden breakout. The upcoming US CPI report on November 14th poses a significant risk that could disrupt this calm if it exceeds expectations. Traders looking for a potential breakout might consider purchasing inexpensive, long-dated options to prepare for a new trend. Create your live VT Markets account and start trading now.

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