Article by ForexTime
EUR/USD is softer Friday after running to a four-day peak at 1.0763 yesterday amid a broad dollar retreat in the wake of the late-October Fed minutes, which signaled a very gradual path to further tightening beyond a still-likely December rate hike. The sharply contrasting policy stances of the ECB and Fed should, however, maintain EUR-USD’s bigger-picture downward bias
German producer price inflation fell back to -2.3% year over year from -2.1% year over year in the previous month, with prices down -0.4% month over month, driven by a -0.9% month over month drop in energy prices and a -0.6% month over month decline in prices for basic goods. Energy price declines also dominate the annual rate as heating oil prices drop 31.1% year over year. Excluding energy, prices fell -0.7% year over year and the drop further into negative territory in recent months highlights that the drop in energy prices is feeding through the product chain.
The currency pair is attempting to bottom with support now seen near the November lows at 1.0630. Resistance is seen near the 10-day moving average at 1.0725. Momentum has turned positive, with the MACD (moving average convergence divergence) index generating a buy signal. This occurs as the spread (the 12-day moving average minus the 26-day moving average) crosses above the 9-day moving average of the spread. The index moved from negative to positive territory confirming the buy signal.
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