Germany’s consumer price index fell 0.2% month on month in October after rising 0.6% in September, while annual inflation slowed from 3.3% to 2.8%. The EU-harmonized index fell 0.1% on the month, with its annual rate also easing from 3.3% to 2.8%, according to Destatis. The softer readings may ease pressure on the European Central Bank (ECB) to raise rates again before year-end.
The US Dollar Index (DXY) traded near 103 on Thursday after reaching 102.90 on Wednesday. Stronger-than-expected US inflation in October reinforced expectations of a December rate hike. Before the release, Fed Governor Christopher Waller said a 50-basis-point increase should be considered if monthly core inflation came in around 0.3% or higher. The reading was 0.3%. Dallas Fed President Lorie Logan said at least two more quarter-point increases were needed. CME FedWatch odds reported on November 12 were 90.7% for a 25-basis-point hike and 9.3% for a 50-basis-point hike, according to Financial News.
Support and resistance levels
On the daily chart, the first-order (I) lines define the established range. This week, EUR/USD has moved lower from the right-hand first-order support line at 1.1300. The main scenario points to a decline toward 1.0947, where the right-hand third-order (III) and left-hand second-order (II) support lines meet, followed by 1.0784, where the right-hand first-order (I) and left-hand third-order (III) support lines intersect.
A break above 1.1103, where the right-hand third-order (III) and left-hand second-order (II) resistance lines meet, could bring the pair to 1.1267. That level marks the intersection of the left-hand third-order (III) and right-hand first-order (I) resistance lines. This is the less likely scenario.
Support levels are 1.0947 and 1.0784.
Resistance levels are 1.1103 and 1.1267.
Trading scenarios and EUR/USD forecast
Short positions may be opened if the price holds below 1.0947, targeting 1.0784 with a stop-loss at 1.1040. The expected time horizon is seven days or longer.
Long positions may be opened if the price holds above 1.1103, targeting 1.1267 with a stop-loss at 1.1020.
Scenario
| Time frame | Weekly |
| Recommendation | SELL STOP |
| Entry point | 1.0947 |
| Take Profit | 1.0784 |
| Stop Loss | 1.1040 |
| Key levels | 1.0784, 1.0947, 1.1103, 1.1267 |
Alternative scenario
| Recommendation | BUY STOP |
| Entry point | 1.1103 |
| Take Profit | 1.1267 |
| Stop Loss | 1.1020 |
| Key levels | 1.0784, 1.0947, 1.1103, 1.1267 |
