EUR/USD Analysis: better market mood boosts the EUR

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1069

Business Sentiment improved in the EU in September, according to the German ZEW survey.
US Federal Reserve monetary policy´s decision taking centre stage.
EUR/USD resumes advance on oil-related relief news, further gains not clear yet.

The FX board continued to be driven by oil-related news, with the latest headlines playing against the American Dollar, just ahead of the US Federal Reserve monetary policy decision. The EUR/USD pair bottomed for the day at 1.0989 amid persistent tensions in the Middle East, following the attack to Saudi oil facilities over the weekend. Sentiment took a turn for the better during US trading hours on a report indicating that Saudi Arabia’s oil output would return to normal levels in the next two to three weeks. Later in the day, the Saudi Oil Minister said that oil supply is fully back online. The EUR/USD pair surged to 1.1073, ending the American session not far below this last.

All eyes on the Federal Reserve

Germany released the September ZEW survey, which showed that Business Sentiment improved by more than anticipated, as the index resulted at -22.5 in the country and at -22.4 for the whole Union. However, the assessment of the current situation in Germany deteriorated further to -19.9 from -13.5 in August. US data released this Tuesday beat the market’s expectations, as Capacity Utilization rose to 77.9% in August while Industrial Production in the same month rose by 0.6%, both beating the market’s expectations.

This Wednesday, the EU will publish the final estimates of August inflation while the US will offer housing data. Nevertheless, the star of the day will be the US Federal Reserve. The central bank is expected to cut rates by 25bps and give no hints on whether it will steepen easing over the next months. Speculative interest, however, is somehow anticipating a dovish stance from Powell & Co.

EUR/USD short-term technical outlook

The EUR/USD pair has recovered nicely but remains within familiar levels. When considering the post-ECB price action, the pair has bottomed around the 61.8% retracement of the 1.0926/1.1109 advance and now stands a couple of pips above the 23.6% retracement of the same rally. In the 4 hours chart, the pair has recovered above its 20 and 100 SMA, which hover around the 38.2% retracement of the mentioned rally. Technical indicators have continued recovering but within negative levels, falling short of supporting additional gains. The pair would have more chances of extending its advance once beyond 1.1085, although the pair’s movements won’t be decisive until post-Fed.

Support levels: 1.1045 1.0980 1.0955

Resistance levels: 1.1085 1.1120 1.1160

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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