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  • The EUR/USD’s close below the 50-month MA is bearish.
  • The bearish technical development is backed by widening the US-German (DE) yield differential.
  • China stimulus talks and the resulting risk-on could see EUR/USD revisit the 50-month MA.

The EUR/USD pair closed well below the key support of 50-month simple moving average (SMA) yesterday, signaling a resumption of the sell-off from the February high of $1.2556.

The greenback surged across the board yesterday after the official data showed that pay for US workers rose 0.9 percent from July to September, pushing yearly earnings growth to the highest level since the 2008 recession.

Meanwhile, the spread between the 10-year US treasury yield and its German counterpart increased to 278 basis points – the highest level since 1989.

The combination of the widening US-DE yield spread and a bearish monthly close indicates that for the EUR, the path of least resistance is on the downside.

However, despite bearish expectations, the pair may shake out weak bears by revisiting the 50-month SMA of 1.1370 today, as the European and the US equities are likely to cheer China stimulus talks.  

EUR/USD Technical Levels

EUR/USD

Overview:
       Last Price:  1.1343
       Daily change:  31  pips
       Daily change:  0.274%
       Daily Open:  1.1312
Trends:
       Daily SMA20:  1.1472
       Daily SMA50:  1.1575
       Daily SMA100:  1.1593
       Daily SMA200:  1.1876
Levels:
       Daily High:  1.1362
       Daily Low:  1.1302
       Weekly High:  1.1551
       Weekly Low:  1.1336
       Monthly High:  1.1625
       Monthly Low:  1.1302
       Daily Fibonacci 38.2%:  1.1325
       Daily Fibonacci 61.8%:  1.1339
       Daily Pivot Point S1:  1.1289
       Daily Pivot Point S2:  1.1266
       Daily Pivot Point S3:  1.1229
       Daily Pivot Point R1:  1.1348
       Daily Pivot Point R2:  1.1385
       Daily Pivot Point R3:  1.1408