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.
The opinions expressed here are solely those of the author and do not necessarily reflect the views of Forex Quebec. Every investment and business move carries risk, you should do your own research when making a decision.
Disclaimer: The information and opinions contained in this report are provided for general information only and do not constitute an offer or a solicitation to buy or sell currency or CFD contracts. Although the information contained in this document has been taken from sources considered reliable, the author does not guarantee its accuracy or completeness, and does not assume responsibility for any direct, indirect or consequential damages that may result from the fact that someone trusts such information.