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EUR/USD Forecast: At Risk Of Extending Its Slump Sub-1.1700 As Things Are Set To Worsen

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EUR/USD Forecast: At Risk Of Extending Its Slump Sub-1.1700 As Things Are Set To Worsen

EUR/USD Current Price: 1.1754

  • The greenback surged on demand for safety triggered by soaring covid cases and fresh restrictions.
  • ECB Monetary Policy decision and the US preliminary Q3 GDP grant a volatile Thursday.
  • EUR/USD is at risk of extending its slump sub-1.1700 as things are set to worsen.

The EUR/USD pair fell to 1.1717 this Wednesday, a fresh weekly low, as panic took over the financial boards. A steep increase in coronavirus cases throughout Europe and higher chances of total lockdowns have put equities in sell-off mode, in benefit of the American currency. Among other countries, Germany is set to close parts of its economy in November, in an attempt to curve contagions. The dollar gave up part of its intraday gains during US trading hours due to overbought conditions but ended the day up against most of its major rivals. Wall Street plunged, with the three major indexes down to fresh October lows.

The macroeconomic calendar has included the German September Import Price Index, which beat expectations, although it remained negative yearly basis. The US MBA Mortgage Applications for the week ended October 23 came in at 1.7%, improving from -0.6%. The September Trade Balance posted a deficit of $79.37B, better than the previous $-83.11B.

This Thursday, the focus will be on the ECB, as the central bank will have a monetary policy meeting. Policymakers are expected to maintain the current stimulus unchanged, but there are good chances that Lagarde & Co. will pave the way for more easing in December. The US will publish the first estimate of Q3 GDP, with the economy expected to have bounced after a record slump in Q2.

EUR/USD Short-Term Technical Outlook

From a technical point of view, the EUR/USD pair is poised to extend its decline. The latest intraday bounce seems corrective, and bulls have no chances unless the pair regains the 1.1800 threshold. In the 4-hour chart, the pair has broken below all of its moving averages, with the 20 SMA gaining bearish strength above the larger ones. Technical indicators have corrected oversold readings but turned flat within negative levels. Renewed selling pressure below 1.1720 will likely result in a steeper decline towards the 1.1640 price zone.

Support levels: 1.1720 1.1680 1.1640

Resistance levels: 1.1770 1.1820 1.1870  

View Live Chart for the EUR/USD

Image sourced from Pixabay

 

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