EUR/USD analysis: looking for a test of the base of the wider range at 1.0840
|EUR/USD Current price: 1.0940
The EUR/USD pair fell down to 1.0915, a stone's throw away from the post-Brexit low of 1.0910, after the ECB's economic policy meeting. The Central Bank left rates and its monthly QE purchases of €80bn unchanged, while President Mario Draghi emphasized that they will continue with extraordinary policy accommodation as long as needed, and reiterated that "there are no signs yet of a convincing upward trend in underlying inflation." During the Q&A session, the pair jumped to its highest for the week at 1.1038, as Draghi said that they didn't discuss a QE extension, but a few minutes later, he added that they didn't discuss tapering either, putting a halt to the early rally and resulting in the pair falling back. Draghi delayed any decision for December, when the Central Bank will have more data to make more accurate decisions.
Data coming from the US was generally positive, with seasonally adjusted initial claims up to 260K in the week ending October 15th, from a revised 247K. The 4-week moving average was 251,750, an increase of 2,250 from the previous week's revised average. The Philadelphia FED Manufacturing survey for October, print 9.7, below previous 12.8 but above market's expectations of 5.3, while existing home sales surprised to the upside in September, up by 3.2% to a seasonally adjusted annual rate of 5.47 million.
The pair bounced modestly from the mentioned low, but so far has been unable to recover above 1.0950, July's low and the immediate short term resistance, still looking quite vulnerable according to intraday technical readings and pointing to test the base of the wide long term range between 1.0840 and 1.1460. Seems unlikely the pair could break below the 1.0800/40 region without a major catalyst, but is possible that the region will be tested during the upcoming days. Technical readings in the 4 hours chart maintain the risk towards the downside, as the price was unable to settle above a still bearish 20 SMA, while technical indicators have barely bounced from oversold readings, without real strength.
Support levels: 1.0910 1.0870 1.0840
Resistance levels: 1.0950 1.1010 1.1055
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