EUR/USD Forecast: US Dollar set to extend gains in the near term
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UPGRADEEUR/USD Current Price: 1.0638
- US Treasury yields pressure multi-year highs, adding to the broad US Dollar strength.
- The Bank of England held fire in its September meeting, surprising market players.
- EUR/USD trades at its lowest since last March, aims to break the 1.0600 level.
The EUR/USD pair extended its Fed-inspired decline to 1.0616 on Thursday, its lowest since mid-March. The pair bounced from the level and hit an intraday high of 1.0664 before resuming its slide. The US Dollar trades with a firmer tone as the United States (US) Federal Reserve (Fed) spurred fears on Wednesday after announcing a hawkish pause. The central bank left the benchmark rate unchanged at 5.5%, yet at the same time, left the doors open for more hikes while reiterating rates will remain higher for longer.
On Thursday, the Bank of England (BoE) announced its monetary policy decision and partially surprised market players by opting for a no-change. Earlier this week, the United Kingdom (UK) released August inflation figures, which were softer than anticipated and somehow hinted at a potential BoE pause. The news helped the USD in its bullish bias as the announcement hit the British Pound.
Meanwhile, the USD receives additional support from US Treasury yields. The 2-year government bond yielded as much as 5.202% ahead of Wall Street’s opening, its highest since 2006. It currently stands at 5.18%, while the 10-year note offers 4.47%, up 12 basis points (bps).
Data-wise, the United States released Initial Jobless Claims for the week ended September 15, which came in better than anticipated, contracting to 201K from 221K in the previous week. Additionally, the Current Account posted a deficit of $212.1 billion, also beating expectations. On a negative note, the September Philadelphia Fed Manufacturing Survey contracted to -13.5, much worse than the -0.7 anticipated by markets.
EUR/USD short-term technical outlook
The EUR/USD pair trades near the aforementioned daily low, and the daily chart shows that additional slides are on the docket. The pair peaked for the week near a firmly bearish 20 Simple Moving Average (SMA), which extends its slump below the longer ones. At the same time, technical indicators remain within negative levels, with the Relative Strength Index (RSI) indicator accelerating its decline at around 33.
In the near term, and according to the 4-hour chart, the risk is also skewed to the downside. EUR/USD develops below bearish moving averages, with the 20 SMA currently acting as dynamic resistance at around 1.0675. At the same time, technical indicators resumed their slides below their midlines, reflecting increased selling interest.
Support levels: 1.0610 1.0580 1.0540
Resistance levels: 1.0675 1.0720 1.0765
EUR/USD Current Price: 1.0638
- US Treasury yields pressure multi-year highs, adding to the broad US Dollar strength.
- The Bank of England held fire in its September meeting, surprising market players.
- EUR/USD trades at its lowest since last March, aims to break the 1.0600 level.
The EUR/USD pair extended its Fed-inspired decline to 1.0616 on Thursday, its lowest since mid-March. The pair bounced from the level and hit an intraday high of 1.0664 before resuming its slide. The US Dollar trades with a firmer tone as the United States (US) Federal Reserve (Fed) spurred fears on Wednesday after announcing a hawkish pause. The central bank left the benchmark rate unchanged at 5.5%, yet at the same time, left the doors open for more hikes while reiterating rates will remain higher for longer.
On Thursday, the Bank of England (BoE) announced its monetary policy decision and partially surprised market players by opting for a no-change. Earlier this week, the United Kingdom (UK) released August inflation figures, which were softer than anticipated and somehow hinted at a potential BoE pause. The news helped the USD in its bullish bias as the announcement hit the British Pound.
Meanwhile, the USD receives additional support from US Treasury yields. The 2-year government bond yielded as much as 5.202% ahead of Wall Street’s opening, its highest since 2006. It currently stands at 5.18%, while the 10-year note offers 4.47%, up 12 basis points (bps).
Data-wise, the United States released Initial Jobless Claims for the week ended September 15, which came in better than anticipated, contracting to 201K from 221K in the previous week. Additionally, the Current Account posted a deficit of $212.1 billion, also beating expectations. On a negative note, the September Philadelphia Fed Manufacturing Survey contracted to -13.5, much worse than the -0.7 anticipated by markets.
EUR/USD short-term technical outlook
The EUR/USD pair trades near the aforementioned daily low, and the daily chart shows that additional slides are on the docket. The pair peaked for the week near a firmly bearish 20 Simple Moving Average (SMA), which extends its slump below the longer ones. At the same time, technical indicators remain within negative levels, with the Relative Strength Index (RSI) indicator accelerating its decline at around 33.
In the near term, and according to the 4-hour chart, the risk is also skewed to the downside. EUR/USD develops below bearish moving averages, with the 20 SMA currently acting as dynamic resistance at around 1.0675. At the same time, technical indicators resumed their slides below their midlines, reflecting increased selling interest.
Support levels: 1.0610 1.0580 1.0540
Resistance levels: 1.0675 1.0720 1.0765
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