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Not strong momentum and not weak position, the upper edge of the euro against the US dollar
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange]: The momentum is not strong, the position is not weak, and the upper edge showdown between the euro and the US dollar". Hope it will be helpful to you! The original content is as follows:
On Wednesday (September 24), the euro and the US dollar traded around 1.1790 in the European session, and have been operating narrowly around 1.18 in the past two days. The reading of the PMI headlines in Europe in September was not bad, but the sub-items were not convincing, and the market bets that the European Central Bank entered a longer "observation and evaluation period".
In the United States, S&PGlobal's xn--xm-6d1dw86k.comprehensive PMI fell from 54.6 to 53.6 in September, the manufacturing industry fell from 53 to 52.0, and the service industry fell from 54.5 to 53.9. The survey still judged that the annualized economic expansion of about 2.2% continued in the third quarter, and inflation was higher than 2% in the next few months. Against this backdrop, Federal Reserve Chairman Powell reiterated the need to "balance risks" between inflation and employment, and overall continued the tone after last week's meeting. There are still differences in the Fed's internal xn--xm-6d1dw86k.communication: Bowman warned that if he hesitated, he might "lagged behind the situation", and agreed to decisive interest rate cuts; Bostic and others were more worried about inflation stickiness. The US dollar index currently rebounds to around 97.50, but due to the cooling of PMI, the momentum is not neat. The macro drives one to rise and fall, and the euro to the US dollar enters a consolidation stage dominated by data verification.
Branditional:
First, Europe's policy context is more "moderate and steady". European Central Bank executive member Cipollone said inflation risks are "very balanced" and interest rates are "in the right position". They will be "close to the target" in the next two years, and inflation expectations are still anchored well. This means that as long as the data has no directional surprises, the policy orientation is mainly patient. For the euro, this helps to lower the uncertainty premium, but it is difficult to provide a new interest rate spread repair.
Second, the United States' "growth is still there and inflation is not extinguished." The PMI falls weakened the "overheating narrative", but the readings are still in the expansion range.In addition to the investigative party's warning about inflation, the US dollar did not weaken unilaterally. Powell's "balanced risk" rhetoric reinforces path dependence: the pace of interest rate cuts obeys the evidence of "slower growth-reversal inflation" rather than preset formulas.
Thirdly, the signal given by the interest rate curve does not point to a trend reversal: after Powell's speech, the US bonds flattened in a bull-like manner, indicating that the market is more concerned about the tail risks of growth and employment downturn; the German bonds and the euro zone curve fluctuated very little, highlighting that Europe's recovery is in a low volatility stage. Overall, the relative xn--xm-6d1dw86k.comparison between interest rate spreads and growth has not yet given a unilateral trend, and the short-term trend is still dominated by range thinking.
Technical:
Daily line shows Bollinger's middle rail 1.1716, upper rail 1.1854, lower rail 1.1577. The exchange rate is now at 1.1790, located above the middle rail and below the upper rail, close to the pressure zone below the upper rail, and the structure is "slowly upward along the middle rail and approaching the upper rail to bear pressure". From the low point 1.1391 to the recent high point 1.1918, the price constitutes a high and low point sequence of rising points, and the upward trend line is still valid; but the 1.1854-1.1918 range superimposed on the previous high and the Bollinger upper edge constitutes dense resistance.
In terms of MACD, DIFF is 0.0038, slightly higher than DEA's 0.0034, and the bar chart is only 0.0008, which is a small positive value near the zero axis. It is "momentum is but not strong", and is more like a gradual climb rather than an accelerated breakthrough; once DIFF falls back and passes down DEA, a short-term retracement signal will be triggered. The relative strength index RSI (14) is 55.7583, which is relatively long but does not touch overbought, pointing to "upward trend can be done but requires large volume confirmation". Based on this, the resistance level is focused on 1.1854, which is 1.1918; the support level is 1.1750 and the middle rail 1.1716. If the middle rail is lost, the back-testing force and stop-fall pattern in the 1.1577 area are observed below.
Prevention of market sentiment:
The core of this wheel drive has switched from "policy expectations" to "data verification". Powell's emphasis on balance has made the market not bet on radical easing; the bull-style flattening of US bonds indicates that the defensive hedging of the downward trend of growth is heating up, but the confidence of inflation is still insufficient. This misalignment makes it difficult for the US dollar to recover.
The expression of "risk balance" on the European side reduces the uncertainty premium, and the euro's safe-haven buying converges. xn--xm-6d1dw86k.combining the characteristics of Bollinger's band bandwidth on the graph and the RSI is relatively neutral, it can be inferred that the volatility is in the contraction stage, and the emotions are not extreme greed or fear, but "cautiously optimistic + waiting for catalysis".
Future Outlook:
In the short term (1-2 weeks), if subsequent high-frequency U.S. data continues to "slow down but not stalled, inflation has fallen moderately", the long-term US bonds may continue to decline, the US dollar's temporary strength is limited, and the exchange rate is expected to test 1.1854 again and launch an impact on 1.1918; considering that the MACD momentum is limited, the breakthrough is more likely to be reflected in the repeated climb of "time for space". It is necessary to observe whether it is accompanied by continuous positive entities or volume amplification to xn--xm-6d1dw86k.complete the confirmation.
If the US data unexpectedly strengthens or inflation reappears stickiness, and the Fed's caliber is biased to push up the actual interest rate spread, the range of 1.1790-1.1750 will be re-tested, and the middle track 1.1716 is a watershed between strong and weak; once it falls effectively, the adjustment target may point to 1.1577, and then it is necessary to observe whether the lower track forms a box rhythm of "stop decline and stabilize - reverse pullback test".
The above content is all about "[XM Forex]: Not strong momentum, not weak position, and the upper edge showdown between the euro and the US dollar". It is carefully xn--xm-6d1dw86k.compiled and edited by the editor of XM Forex. I hope it will be helpful to your trading! Thanks for the support!
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