November 1, 2022 03:03 AM ET
By:AnalysisWatch
EUR/USD attracts some buying near the 0.9870 area on Tuesday and reverses some of the previous day's decline to a multi-day low. The pair maintained its bid tone throughout the early European session and is currently near the daily high around the 0.9925-0.9930 area.
A good recovery in global risk sentiment triggers some selling around the safe-haven US dollar, which, in turn, offers some support to the EUR/USD pair. However, concerns about further global economic recession should limit the dollar's losses. Investors may also prefer to stay on the sidelines ahead of Wednesday's crucial FOMC policy decision.
From a technical standpoint, the post-ECB rejection decline from the 100-day SMA stops near the breakout point of confluence resistance, comprising a four-month downtrend line and the 50-day SMA. This resistance-turned-support, currently around the 0.9880-0.9870 region, should now act as a pivot point and determine the next leg of a directional move for the EUR/USD pair.
Meanwhile, oscillators on the daily chart remain in positive territory, supporting the prospect of further appreciation. Therefore, further strength towards the test of the overnight high, around the 0.9965 region, remains a distinct possibility. Momentum could build, allowing EUR/USD to reclaim parity.
On the other hand, the 0.9880-0.9870 area could continue to protect the immediate downside ahead of the mid-0.9800s. A convincing break below will shift the bias in favor of the bearish and make the EUR/USD pair vulnerable. The bearish trajectory could then drag spot prices below the 0.9800 round figure towards the next relevant support near the 0.9770 area and the 0.9700 mark.