EUR/USD: Geopolitics have their effect on the pair

KEY CHART ELEMENTS
Forex traders are keeping their eyes riveted on geopolitical developments in the Near and Middle East. Macroeconomic data will be scarce today, with only the New York Fed's Empire State manufacturing index due. If the geopolitical situation were to deteriorate, the dollar would play its role as a safe-haven asset, pushing the euro down. At this stage, the market is almost certain that the FED will maintain its key rates at its next meeting. Nonetheless, the possibility of a 25 basis point hike at the December meeting has risen from 23% a week ago to 34% following the latest inflation data, which came as a negative surprise to traders. Technically, the pair is continuing to follow the scenario established several days ago, namely the formation of a range in the 1.04 - 1.08 zone. We can therefore sell on rebounds and buy opportunistically as we approach recent lows.

MEDIUM-TERM FORECAST
In view of the key chart factors we have mentioned, our medium-term view on the EUR/USD is neutral.

We will maintain this neutral view as long as the EUR/USD is positioned between support at $1.0435 and resistance at $1.0550.