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Abstract: In early November, investor confidence in the eurozone rose more than expected, and expectations for the future were at the highest level since the beginning of this year. Patrick Hussy, general manager of Sentix, said that the weakening of negative momentum is the initial sign of improvement. However, to finally determine this trend, the expected value must be turned into a positive value.

Fundamentals

Sentix investor confidence index in the eurozone rose from -21.90 to -18.6 in November, the highest level since June, exceeding the market expectation of -22.5.

The details of the report are also encouraging, and the current situation index has slightly improved from -27.0 to -26.8. The expected index jumped to optimism, rising from -16.8 to the highest point since February -10.0.

However, it is important to admit that expectations are still in a negative state. Sentix reports that "the reduction of negative momentum is an initial sign of improvement, but only when expectations turn positive can the alarm be lifted".

A remarkable development is the rise of Sentix's "inflation" theme index, which has entered a positive region for the first time since the beginning of 2020, indicating that inflation as a key issue may be weakening. The index currently stands at +6.5, a development that may reduce the urgency for the European Central Bank (ECB) to take action.

On the market side, good consumer confidence failed to boost the EUR Until the New York session, the EURUSD further fell below 1.0665, which was a 38.2% Fibonacci retracement of the EURUSD's rebound from last week's low of 1.0517.

However, intraday and daily structural studies show that trend momentum remains bullish, but these signals are weakening as the EUR moves lower. Bullish DMIs should curb the scope of the EUR's decline, at least for now. Support should become firmer at the 1.0600 low.

Now, the market is waiting for Fed officials to comment. More risk sentiment will provide some trading opportunities for the EURUSD along with the 10-year U.S. Treasury Securities yield.

Technical Analysis

With the EURUSD showing further retreat, the intraday bias for the EURUSD has shifted from very strong to neutral, and there may be some consolidation. Nonetheless, intraday structural studies suggest that momentum remains bullish, and further rallies are favorable as long as the 55-hour and 4-hour SMAs (currently at 1.0637) are held. After that, if bulls decisively break above 1.0764 resistance (38.2% Fibonacci retracement of 1.1274 to 1.0447 at 1.0763), the next uptrend will extend from 1.0447 to 61.8% Fibonacci retracement of 1.0958.

However, a sustained break below 1.0637 would indicate that Friday's strong rally is over, with short-term bearish targets at 1.0515 support and then the low of 1.0448.

From a broader perspective, the price action from 1.1274 is seen as an adjustment pattern to the rise from 0.9534 (2022 low). The rise from 1.0448 is tentatively seen as second support. Therefore, while a further rally is possible, the upside should be limited by 1.1274 to bring about a continuation of the downward pattern.

Overall, similar to other USD-associated assets, if the EURUSD rebounds, it will be moderate, and it could continue to fall in later trading. It is recommended to go short at the highs.

Trading Recommendations

Trading direction: Short

Entry price: 1.0700

Target price: 1.0450

Stop loss: 1.0770

Deadline: 2023-11-21 23:55:00

Support: 1.0643, 1.0614, 1.0568

Resistance: 1.0696, 1.0757, 1.0791