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EUR/USD Has Room to Accelerate Its Slump Once Below 1.1520

EUR/USD Current price: 1.1530

  • German ZEW survey showed that Economic Sentiment contracted for a fifth consecutive month.
  • US Federal Reserve officials are hinting at soon-to-come tapering once again.
  • EUR/USD has room to accelerate its slump once below 1.1520.

The EUR/USD pair pierced its former 2021 low mid-US afternoon and trades near a fresh one of 1.1524. The American dollar gathered momentum during US trading hours, helped by comments from US Federal Reserve officials aligned with soon-to-come tapering. Vice-Chair Richard Clarida said, “I myself believe that the ‘substantial further progress’ standard has more than been met with regard to our price-stability mandate and has all but been met with regard to our employment mandate,” adding that gradual tapering of assets purchases could conclude mid-2022.

Federal Reserve Raphael Bostic noted that inflation is well above Fed’s 2% goal, noting that persistent supply chain issues will probably last longer than initially anticipated. Hence, policymakers need to watch carefully to ensure that pandemic-induced pressures do not cause long-term inflation expectations to become unanchored.

The shared currency kept suffering from dismal local data, as the German ZEW Indicator of Economic Sentiment fell to 22.3 in October from 26.5 previously, missing the market’s expectations and falling from a fifth consecutive month.  The assessment of the current situation has worsened to 21.6, while the Economic Sentiment for the EU fell to 21 from 31.1. In the US, The number of job openings declined to 10.4 million in August following a series high in July, the US Bureau of Labor Statistics reported.

On Wednesday, the EU will publish August Industrial Production, while Germany will release September inflation figures. The US will unveil the September Consumer Price Index and the FOMC Meeting Minutes.

EUR/USD short-term technical outlook

The EUR/USD pair trades a handful of pips above the mentioned 2021 low, down for a second consecutive day. Technical readings in the daily chart favor another leg lower, as the pair develops well below firmly bearish moving averages. At the same time, technical indicators remain within negative levels, with the RSI resuming its decline within oversold readings.

In the near term and according to the 4-hour chart, the bearish case is firmly in place, as the Momentum indicator heads firmly lower within negative levels, as the RSI indicator consolidates losses around 32. Furthermore, the pair has finally broken below its 20 SMA, while the longer moving averages maintained their bearish slopes far above the shorter one.

Support levels: 1.1520 1.1475 1.1440

Resistance levels: 1.1580 1.1640 1.1685

Image Sourced from Pixabay

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