EURUSD: ECB members capped the EUR fall against the USD, despite upbeat US data

• The USD got bolstered by upbeat US economic data, erasing EURUSD's earlier gains.
• European Central Bank (ECB) officials expressed the need for higher rates, putting a lid on EUR losses.
• Short term, the EURUSD is downward biased, eyeing a break of 0.9800 to challenge 0.9700.

The Euro gave back some of its earlier gains vs. the US Dollar and finished the day almost flat, though registering a minimal loss of 0.04%. Goodish economic data out of the United States, and US Treasury yields recovering from the daily lows, below 4%, and the Federal Reserve November meeting, were some of several reasons that undermined the EUR. The EURUSD is trading at 0.9874, down by 0.02%.

Manufacturing activity in the United States expanded though at a slower level, underpinned the USD to the detriment of the EUR

On Tuesday, Wall Street finished with decent losses amidst data revealing that the United States economy remains at expansionary territory. The Institute for Supply Management (ISM) PMI for October showed that manufacturing activity remained resilient at 50.2, beating estimates of 50, but lower than the September report. Echoing some of the same results as the S&P Global Manufacturing PMI for the same period was a prelude for the ISM, rising to 50.4, exceeding estimates and the previous month's data.

The EURUSD tumbled on the S&P Global PMI headline, from around 0.9930s toward 0.9860s, and since the release of the ISM PMI, has hovered around the 0.9870s area.

In the meantime, the US labor market, widely mentioned by the Federal Reserve in its monetary policy statement, remains tight as the September JOLTS report, revealed by the US Labor Department, reported that job openings, augmented by 10.717 million, above the 10 million forecast, and smashed August’s 10.28 million.

European Central Bank (ECB) policymakers added that rates hikes would continue

Aside from this, European Central Bank (ECB) policymakers, led by its President Christine Lagarde, said that rates in the Euro area should peak at a level that “ensures” that inflation returns to the 2% target over the medium term. Lagarde’s added that “the destination is clear, and we haven’t reached it yet,” said in an interview.

Lagarde’s added that inflation remains too high throughout the Eurozone, following Monday’s report of inflation around 10.7%, and acknowledged that the likelihood of a recession has increased.

Late in the New York session, more ECB officials, led by Joachim Nagel and Pablo Hernandez de Cos, agreed that inflation is persistent and that the ECB still has “a long way to go.”

Traders get ready for the Federal Reserve (Fed)

Elsewhere, EURUSD traders prepared for the Fed’s November meeting. Analysts expect the US central bank to hike rates by 75 bps, which would be a fourth of a kind as the Federal funds rate (FFR) will hit the 3.75-4% range. Even though the decision is important, due to the financial narrative speculation for a Federal Reserve pivot, the highlight of the day will be Jerome Powell's press conference, which would shed some light regarding a deceleration for the pace of interest-rate hikes, or grab a page of the ECB’s President Lagarde’s book, and probably go to the “meeting-by-meeting” decisions.

EURUSD Price Analysis: Technical outlook

The EURUSD hourly chart confirms the pair as neutral-to-downward biased. Even though the EUR jumped toward the 20-hour Exponential Moving Average (EMA) at 0.9907, on a headline of the US President Biden endorsing a Fed pivot. However, later it was corrected as Biden endorsed the Fed tightening monetary policy in 2022, After the headline, the EURUSD reversed its uptrend and plunged toward its daily low at 0.9853.

The Relative Strength Index (RSI) at bearish territory portrays sellers remaining in charge. Hence, the EURUSD's first support would be 0.9853. Break below will expose the 0.9800 figure, followed by the October 21 daily low at 0.9704.