Market Overview

EUR/USD Forecast: Retains Its Longer-Term Bearish Potential After A Modest Daily Advance

EUR/USD Forecast: Retains Its Longer-Term Bearish Potential After A Modest Daily Advance

EUR/USD Current Price: 1.1663

  • Demand for the greenback receded on a better market’s mood.
  • ECB’s Lagarde said policymakers are monitoring FX movements.
  • EUR/USD retains its longer-term bearish potential after a modest daily advance.

The EUR/USD pair advanced this Monday, as optimism weighed on the dollar’s demand. Equities were up, amid encouraging signs of economic progress in China. Equities rallied, led by bank-related shares, which soared after Chinese Ping An Insurance announced that it would increase its stake in Europe’s largest lender, HSBC. The market mood was also underpinned by renewed hopes about a post-Brexit trade deal.

The pair, however, remained below Friday’s high and retreated during the American session, affected by comments from ECB’s President Christine Lagarde. While delivering the introductory statement at the ECON committee of the European Parliament in Brussels, Lagarde said that the external value of the shared currency has an impact on inflation, adding that policymakers monitor FX movements.  

The EU didn’t publish macroeconomic data, while the US unveiled the Dallas Fed Manufacturing Index, which rose to 13.6 in September, from 8 in the previous month. This Tuesday, the Union will release the September Economic Sentiment Indicator, foreseen at 89.5 from 87.7 previously. The US will publish the August Trade Balance and the CB Consumer Confidence, expected at 90.0 from 84.8 in August.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair briefly surpassed the 23.6% retracement of its latest daily decline at 1.1673 but was unable to advance beyond it. The short-term picture suggests that the current advance was corrective, as the 4-hour chart shows that the price is battling to surpass a bearish 20 SMA. Technical indicators, in the meantime, have lost directional strength after reaching their midlines. The 38.2% retracement of the mentioned decline is around 1.1715, with bulls having better chances above it.

Support levels: 1.1605 1.1560 1.1520

Resistance levels: 1.1675 1.1715 1.1760  

View Live Chart for the EUR/USD

Image sourced from Pixabay


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