EUR/USD Forecast: Risk-off flows to start the week
|EUR/USD Current Price: 1.0523
- The United States and Canada celebrate a bank holiday on Monday.
- Tensions in the Middle East spur demand for the safe-haven US Dollar.
- EUR/USD gapped lower at the weekly opening, aims to pierce the 1.0500 mark.
The EUR/USD pair trades near an intraday low of 1.0518 as risk-off flows underpin the US Dollar. On Saturday, the armed Palestinian group Hamas launched a surprise attack on Israel, and Israeli Prime Minister Benjamin Netanyahu declared his country was at war on Sunday. Tensions around the Gaza Strip push investors into safe-haven assets despite the Bank of Israel's announced measures to support markets.
European data did little to support the Euro, as German Industrial Production fell by 0.2% MoM in August and declined 2% from a year earlier. The EU Sentix Investor Confidence index printed at -21.9 in October, worse than the previous -21.5 but better than the -24 anticipated by analysts. The American session will bring speeches from a few Federal Reserve (Fed) speakers, although a bank holiday in the United States (US) and Canada anticipate limited volatility.
The macroeconomic calendar will feature this week the Federal Open Market Committee (FOMC) Meeting Minutes on Wednesday and the US September Consumer Price Index (CPI) on Thursday.
EUR/USD short-term technical outlook
The EUR/USD pair trades in the red, ending a three-day winning streak. The risk skews to the downside according to the daily chart, as the pair retreated sharply from a bearish 20 Simple Moving Average (SMA), which remains far below the longer ones. At the same time, technical indicators turned south within negative levels and, after correcting extreme oversold conditions, in line with another leg south.
The 4-hour chart shows that EUR/USD is currently sliding through a bullish 20 SMA after meeting sellers around a bearish 100 SMA, reflecting increased selling interest. At the same time, technical indicators aim firmly lower around their midlines, also supporting a downward extension, particularly if the pair extends its slide below 1.0510, the immediate support level.
Support levels: 1.0510 1.0480 1.0435
Resistance levels: 1.0550 1.0590 1.0630
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