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  • GDP figures from the euro area disappoint on Tuesday.
  • Consumer confidence continues to rise in the U.S.
  • US Dollar Index stays close to the critical 97 mark.

Following a slump to a daily low at 1.1345 during the European trading hours, the EUR/USD pair staged a rebound in the early NA session but lost its momentum before reaching the 1.14 mark. As of writing, the pair was trading at 1.1357, losing 0.13% on the day.

Earlier today, the data released by the Eurostat showed that the GDP growth in the euro area in the first estimate fell to 0.2% on a quarterly basis in the third quarter from 0.4% recorded in the second quarter and fell short of the analysts’ estimate of 0.4% while dragging  the annualized rate down to 1.7% from 2.2%. Additionally, Italy’s Q3 GDP growth came in at 0% and caused the Italian – German bond yields to widen to put extra weight on the shared currency’s shoulders.  

Commenting on the data, “Actual stagnation in Italy, Q3 GDP at 0%, reinforces the 5 Star/League insistence on a 2.4% budget deficit to lift Italy out of incipient recession. How will the EU demand for restraint play with the Italian electorate?” said FXStreet Senior Analyst Joseph Trevisani.

On the other hand, the Conference Board’s Consumer Confidence Index continued to rise in October suggesting a strong consumer sentiment in the U.S. “The Expectations Index posted another gain in October, suggesting that consumers do not foresee the economy losing steam anytime soon. Rather, they expect the strong pace of growth to carry over into early 2019,” noted  Lynn Franco, Senior Director of Economic Indicators at The Conference Board.  

The US Dollar Index, which lost its traction before testing the 97 handle earlier in the day, dropped to 96.70 before gathering some bullish momentum in the last couple of hours. As of writing, the index was up 0.25% on the day at 96.92.

On Wednesday, the Eurostat is scheduled to publish its preliminary inflation report. Markets expect the annual core CPI to tick up to 1% in October and a disappointing CPI figure  is likely to weigh on the euro and force the pair to test the  1.13 mark – 2018 low.  

Technical levels to consider

The initial support for the pair aligns at 1.1335 (Oct. 26 low) ahead of 1.1300 (Aug. 15 low) and 1.1235 (Jun. 5, 2017, low). On the upside, resistances align at 1.1415 (Oct. 29 high), 1.1480 (20-DMA) and 1.1550 (Oct. 22 high).