EUR/USD Forecast: Capped By Relevant Fibonacci Resistance Level At 1.1850

EUR/USD Current Price: 1.1820

• ECB left its monetary policy unchanged, policymakers not concerned about the exchange rate.
• Dollar strengthened as Wall Street resumed its slump on local woes.
• EUR/USD capped by relevant Fibonacci resistance level at 1.1850.

The EUR/USD pair soared this Thursday, and traded as high as 1.1917 in the aftermath of the ECB monetary policy announcement, as the central bank was as “hawkish” it could be within a pandemic context. As widely anticipated, the current monetary policy was left unchanged. There were modest revisions to growth and inflation figures for this year and the next ones, although the hot spot was the exchange range, as policymakers said that, while they are watching it, they don’t intend to start a war over it, somehow suggesting they won’t intervene.

 And while recognizing the persistent uncertainty, Lagarde started her speech mentioning a strong rebound in macroeconomic activity, although noting that it’s still below pre-pandemic levels and adding that ample accommodative support is needed.  The US, on the other hand,   published Initial Jobless Claims for the week ended September 4, which came in at 884K, worse than anticipated. The country also released August PPI which beat expectations but remained in the red at -0.2% YoY. This Friday, Germany and the US will publish their respective final August inflation figures.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair eased from the mentioned high to settle around 1.1820, trimming most of its intraday gains. The pair has topped for the day around the 61.8% of its latest daily slide from the year high at 1.1910, now trading below the 38.2% retracement of the same slide providing resistance at 1.1850. In the 4-hour chart, the pair is trading above all of its moving averages, while technical indicators retreated from daily highs, but stabilized within positive levels. Overall, the bearish scope seems limited at the time being, yet the pair would need to overcome the daily high to have room to extend its advance towards the 1.2000 region.

Support levels: 1.1810 1.1760 1.1725

Resistance levels: 1.1850 1.1910 1.1950  

View Live Chart for the EUR/USD

Image sourced from Pixabay