The EUR/USD price pulled back slightly on Friday and Monday morning. It dropped to a low of 0.9956, which was slightly below this month’s high of 1.0094. This decline happened after the latest ECB decision and the strong American GDP data published last week. Focus now shifts to the upcoming Fed decision.
EUR to USD October review
The EUR/USD price had a relatively strong performance in October as bulls moved to buy the dip. It rose by more than 5.86% from its lowest level during the month. This jump happened as investors started pricing in a situation where the Federal Reserve starts its pivoting away from aggressively hiking interest rates in the coming months.
Last week, the ECB decided to hike interest rates by 0.75% for the second month in a row. It also decided to end its support for European banks, which are now becoming more profitable. Last week, key EU banks like Deutsche Bank and Unicredit announced strong results, helped by higher interest rates.
November will have several important events that will have an important impact on the EUR/USD price. First, the US will hold its midterm elections, which will change control of Congress. Analysts expect that Republicans will take control of the House of Representatives. It is still unclear who will lead the Senate.
The biggest driver for the EUR/USD pair will be this week’s Federal Reserve decision. Economists expect that the Fed will deliver another 0.75% interest rate hike in a bid to keep fighting soaring inflation. The main catalyst will be sign of a pivot by the bank. If this happens the EUR/USD price will likely keep rising in November.
However, US GDP data published last month showed that the Fed has a room for more hikes. The data showed that the American economy did well in the third quarter as it moved away from a recession.
EUR/USD forecast
The EUR/USD price has been in a strong recovery in the past few days. In this period, it managed to rise above the important resistance level at 1.000, which was the highest level on October 4. The pair has now retested this price and is slightly above the 50-day moving average. It has also moved above the ascending trendline shown in green.
Therefore, I suspect that the pair will likely resume the bullish trend in November as buyers target the next key resistance level at 1.0197. A drop below the support at 0.9900 will invalidate the bullish view.
