The euro continues to fall in the foreign exchange market against the US dollar

EUR / USD decline continues as fears reign

A sharp fall in US equities has exacerbated demand for the safe-haven US dollar. US Treasury yields continue to consolidate and remain near multi-month highs. The EUR / USD pair is extremely oversold in the forex market but with no signs of bearish exhaustion.

EUR / USD extended its 2021 crash to 1.1562, its lowest forex since July 2020, staying close to Friday’s Asian open. The pair touched the mentioned daily low during US trading hours, following a sharp drop in US equities. Market sentiment remains bitter amid inflationary fears and chain disruptions. supply that affect the global economic recovery.

EUR / USD daily chart

On the data front, the European figures did not meet market expectations, which affected the common currency. German inflation remained stable in September according to preliminary estimates, below the expected 0.1%. The change in unemployment in the country amounted to -30K, also below market expectations.

In contrast, the US data was mixed, with jobless claims rising again, printing to 363,000 for the week ending September 24. Gross domestic product was confirmed at 6.7% in the second quarter, slightly better than expected. Finally, the basic prices of personal consumption expenditure met expectations with 6.1%.

Germany will release retail sales for August on Friday, and they are forecast to rise 1.5% month-on-month, down from -5.1% in July. Markit will release the final version of its September manufacturing PMIs for the EU and the US, while the latter will release the official ISM manufacturing PMI for September, forecast at 59.6 from 59.9 the previous month. In addition, the EU will publish the preliminary inflation estimate for September, while the US will publish the PCE core inflation for August.

Short-term forex technical outlook for EUR / USD

The EUR / USD pair ended the day with heavy currency losses, falling for the fifth day in a row. The daily chart shows that technical indicators maintain their strong bearish slope, although they are currently developing at oversold levels. The 20 SMA moving average has accelerated its decline well above the current level, while below the longer ones, reflecting growing interest from sellers.

In the short term and according to the 4-hour chart, the bearish case persists, although the technical indicators have reduced their falls, now consolidating at extreme oversold levels. The moving averages are heading firmly lower well above the current level, reflecting the strength of short interest. Further declines could be expected on a break below 1.1560, although the odds of a corrective advance have now increased.

Support levels: 1.1560 1.1520 1.1485

Resistance levels: 1.1640 1.1680 1.1725

By Valeria Bednarik, FXStreet

Valeria Bednarik has extensive experience writing technical and fundamental analysis with a particular focus on currencies and commodities. His short but precise pieces cover the different aspects of the market, adopting a didactic approach adapted to the level of experience of any reader. She graduated from the Universidad Católica del Salvador, Argentina, as a Certified Accountant, specializing in taxation and cost management.

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