**EUR/USD Extends Gains for Eighth Consecutive Day Amid US Dollar Weakness**
EUR/USD continued its rally on Friday, marking its eighth straight day of gains and trading at 1.1640 at the time of writing. The pair is on track for a 0.6% weekly rally, drawing support primarily from a weakening US Dollar. Investors are anticipating a slew of weak US economic data due next week, as US authorities prepare to release macroeconomic figures that were delayed due to the recent government shutdown.
**Fed Officials Cautious on Policy Easing**
Meanwhile, Federal Reserve policymakers have shown reluctance to ease monetary policy further. On Thursday, St. Louis Fed President Alberto Mussalem and Cleveland Fed President Beth Hammack expressed greater concern about inflation risks rather than the labor market’s momentum. In contrast, Minneapolis Fed President Neel Kashkari struck a more neutral tone, emphasizing the need for caution regarding future policy decisions.
**US Dollar Weakness Offsets Disappointing Eurozone Data**
The US Dollar’s weakness has largely offset the negative impact of a disappointing Eurozone Industrial Production report. On Friday, the market’s focus shifts to the second reading of the Q3 Eurozone Gross Domestic Product (GDP), while more speeches from Fed officials in the US are expected to provide fresh direction for the Greenback.
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**Daily Digest: Market Movers**
**Euro’s Strength Driven by US Dollar Weakness**
The Euro’s ongoing two-week rally is being supported by US Dollar weakness rather than robust Eurozone data. Investors have remained cautious about placing large Dollar-long positions amid the recent blackout in US economic data, and so far, hawkish comments from Fed officials have had limited impact on the market’s direction. The upcoming release of delayed US figures next week is expected to provide a clearer picture of the state of the US economy and help determine the Dollar’s direction.
**Fed Officials Remain Hawkish**
On Thursday, Cleveland Fed President Beth Hammack commented that monetary policy is currently only barely restrictive, emphasizing the need for interest rates to remain at levels that help reduce inflation. St. Louis Fed President Mussalem echoed that the Fed’s primary concern is inflation, affirming that there is limited room to ease policy without becoming overly accommodative. Minneapolis Fed President Neel Kashkari highlighted the resilience of the US economy in a Bloomberg interview, urging caution over further monetary easing. Regarding the December meeting, Kashkari said he is still undecided but lacks a strong inclination for an immediate interest rate cut.
**Eurozone Economic Data Fails to Impress**
In Europe, Eurozone Industrial Production rose by just 0.2% in September following an upwardly revised 1.1% decline in August. Year-on-year, factory activity grew at a steady 1.2% pace—well below market expectations of 0.7% monthly growth and a 2.1% yearly improvement. On Friday, Eurozone GDP is expected to confirm preliminary data, pointing to a 0.2% quarterly expansion and 1.3% growth over the past 12 months.
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**Technical Analysis: EUR/USD Remains Above Channel, With 1.1670 in Sight**
EUR/USD has broken above the top of a descending channel from the early October highs and is consolidating gains heading into the weekend. Technical indicators remain positive, though the 4-hour Relative Strength Index (RSI) is approaching overbought territory after eight consecutive days of gains. Additionally, the Moving Average Convergence Divergence (MACD) on the same timeframe appears poised to cross below the signal line, hinting at possible consolidation ahead.
To maintain the current upward momentum, bulls need to stay above the channel top, currently around 1.1610, and keep the October 28 and 29 highs near 1.1670 in focus. Should price action remain strong, the next target is the October 17 high near 1.1730. Conversely, a correction below the mentioned trendline at 1.1610 could see support at the November 12 low near 1.1575, followed by the 1.1530–1.1540 area, which aligns with the November 7 and 10 lows.
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**Key Levels to Watch:**
– **Resistance:** 1.1670 (October 28/29 highs), 1.1730 (October 17 high)
– **Support:** 1.1610 (channel top), 1.1575 (November 12 low), 1.1530–1.1540 (November 7/10 lows)
Stay tuned for critical US and Eurozone data releases next week, which are expected to provide further direction for EUR/USD.
https://bitcoinethereumnews.com/finance/eur-usd-appreciates-further-with-the-us-dollar-on-its-back-foot/
