As soon as the energy crisis in Europe eased and the turmoil in the British financial markets faded, the EUR/USD bulls regained their spirits. Gas prices have fallen for the fourth day in a row as gas storages are filled by an above-average 92%. LNG flows from overseas and forecasts of warm weather in Europe for two weeks in a row are also reported. As a result, gas futures prices plummeted to their lowest level since mid-June, much to the delight of euro buyers.

While gas prices are falling in Europe, dark clouds are looming over Prime Minister Liz Truss in the UK. It is one step from hero to zero, and the new Prime Minister has made it. She announced a massive £45 billion fiscal stimulus and then rejected a £32 billion tax cut. Markets may stay calm but the new head of government is unlikely to remain so. Her reputation has been damaged, suggesting political uncertainty. This may cause a sell-off in not just the British pound but in other European currencies as well.

However, so far the pound and the euro are rising, benefiting from falling gas prices and British bond yields. Market stress is left behind for a while, and the first circumstance undermines the US dollar. Is it possible to do that, though? At the summit, the heads of central banks and finance ministers of G20 countries did not agree on a coordinated currency intervention, which puts pressure on risky assets and helps the USD index. International borrowers are scrambling for the save-haven USD cash as their foreign currency-denominated obligations are due to be repaid by the end of the year.

Bloomberg deposit rate forecasts

The greenback still has enough tricks up its sleeve even without the high demand for safe-haven assets and exceptional economic conditions in the US. Another thing is that many negative factors have already been taken into account in the euro rate, which may lead to a pullback in the EUR/USD pair. There is more and more hawkish rhetoric coming from the ECB, including a 75bp deposit rate hike at two consecutive meetings in November and December and bringing borrowing costs to 3% in 2023. This is higher than the derivatives market was expecting and Bloomberg experts forecasted. According to Joachim Nagel, head of the Bundesbank, the European Central Bank should cancel monetary stimulus as soon as possible amid alarmingly high inflation

All of the above is definitely good for the euro. However, it is not enough. The financial markets have not fully calmed down. They may surge from time to time. The closer a recession in the world economy gets, the more often it will. This means it is too early to sell the US dollar.

From the technical point of view, the euro/dollar pair rebounded from the diagonal resistance and the third moving average, which is part of the Bill Williams' Alligator indicator on the daily chart. Bulls failed to catch the pivot level of 0.9846 and the price fell below the support level of 0.9815. These are the reasons to sell the euro against the US dollar.