#EURUSD @ 1.08443 has extended its downside below 1.0850 as the risk-off impulse has strengthened. (Pivot Orderbook analysis)

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• EUR/USD has extended its downside below 1.0850 as the risk-off impulse has strengthened.
• Following the footprints of the German GDP, Eurozone GDP could display a contraction too.
• The street is expecting a 25 bps interest rate hike from the Fed and a 50 bps rate hike from the ECB.

The pair currently trades last at 1.08443.

The previous day high was 1.0914 while the previous day low was 1.0839. The daily 38.2% Fib levels comes at 1.0868, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.0885, expected to provide resistance.

The EUR/USD pair has extended its downside move below 1.0850 after an intensive selling action by the market participants around 1.0860. The pullback move displayed by the shared currency pair met with significant offers as the US Dollar Index (DXY) has shown a stellar recovery after correcting to near 101.80.

Gains recorded by the S&P500 futures have disappeared as investors have underpinned the risk-aversion theme ahead of the interest rate decision by the Federal Reserve (Fed). Investors are worried that further interest rate hike announcements by Fed chair Jerome Powell will accelerate recession fears significantly.

The USD Index is recovered dramatically as a 25 basis point (bps) interest rate hike is widely expected by the street. The roadmap of achieving price stability is far from over as the current inflation rate in the United States is three times more than the desired rate of 2%. Therefore, the Fed cannot pause hiking interest rates at this point in time.

Apart from the policy decision, investors will keenly focus on the interest rate guidance. Analysts at Rabobank cited “We continue to think that based on the fading momentum of inflation, the Federal Open Market Committee (FOMC) is likely to stop at a 4.75-5.00% target range and pause for the remainder of the year.”

On the Eurozone front, investors are also awaiting the interest rate decision by the European Central Bank (ECB). Rising labor cost and an inflation rate above 9% is still a concern for ECB President Christine Lagarde. As per the consensus, ECB President will announce an interest rate hike of 50 bps to 2.50%.

But before that, preliminary Eurozone Gross Domestic Product (GDP) (Q4) data will remain in focus. The economic data is seen at 0% vs. the prior release of 0.3% on a quarterly basis. While the annual GDP might contract to 1.8% from 2.3% reported earlier. Investors should be prepared for a contraction in Eurozone GDP as the German economy reported a contraction of 0.2% on Monday against a flat reading as expected.

Technical Levels: Supports and Resistances

EURUSD currently trading at 1.0848 at the time of writing. Pair opened at 1.0846 and is trading with a change of 0.02 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1.0779, 50 SMA 1.0636, 100 SMA @ 1.0284 and 200 SMA @ 1.0312.

The previous day high was 1.0914 while the previous day low was 1.0839. The daily 38.2% Fib levels comes at 1.0868, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.0885, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1.0819, 1.0792, 1.0744
• Pivot resistance is noted at 1.0893, 1.0941, 1.0968

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