Market Overview

EUR/USD Forecast: Bearish After Breaking Below A Daily Ascendant Trend Line

Share:
EUR/USD Forecast: Bearish After Breaking Below A Daily Ascendant Trend Line

EUR/USD Current Price: 1.1746

  • US traders came back from a long weekend to rush into safety.
  • Subdued inflation both shores of the Atlantic added to concerns about economic growth.
  • EUR/USD is bearish after breaking below a daily ascendant trend line.

Risk aversion returned with a vengeance, and the American currency was the overall winner. Following a dull start to the week due to a US holiday, investors jumped into the greenback in search of safety. The absence of a US stimulus package, no progress in a Brexit deal, and the rising number of coronavirus contagions followed with their respective restrictions, are behind the dismal mood.

Macroeconomic data exacerbated the sour sentiment, as Germany published the final readings of September inflation, which came in as expected, printing at -0.2% YoY. The country also released the October ZEW Survey, which showed that the Economic Sentiment contracted by more than anticipated, down to 56.1 from 77.4. For the EU, the sentiment was also worse than anticipated, falling from 73.9 to 52.3. As for the US, the country also published its final September CPI, which came in at 1.4%, YoY as expected. The core reading, however, missed the market’s forecast of 1.8% and was confirmed at 1.7%. Subdued inflation on both shores of the Atlantic adds to concerns about economic growth.

This Wednesday,  the EU will publish August Industrial Production figures, while ECB’s President Lagarde is due to offer a speech. The US will offer September PPI and a speech from Fed’s Clarida.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair has accelerated its decline after breaking below a daily ascendant trend line coming from late September, now providing resistance in the 1.1770 area. It is trading near a daily low of 1.1729, maintaining its bearish stance. The 4-hour chart shows that it is currently struggling around a bearish 100 SMA, while technical indicators hover near oversold readings, partially losing their bearish strength, but still signaling a downward extension ahead. The ongoing decline will likely accelerate on a break below 1.1720, the immediate support.

Support levels: 1.1720 1.1680 1.1635

Resistance levels: 1.1770 1.1810 1.1850

View Live Chart for the EUR/USD

Image sourced from Pixabay

 

Related Articles

View Comments and Join the Discussion!

Posted-In: EUR/USD FXStreetNews Eurozone Global Markets