EUR/USD Analysis: corrective decline set to continue

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1131

Brexit drama weighed on the common currency, further declines expected.
The EU and the US macroeconomic calendar will remain light this Wednesday.
EUR/USD heading toward 1.1065, the 38.2% retracement of its latest daily advance.

The EUR/USD pair has fallen intraday to 1.1122, a fresh weekly low, but managed to bounce from the level ahead of Wall Street close. Nevertheless, it’s finishing the day in the red for a second consecutive day. The dollar enjoyed some temporal demand, advancing against most major rivals, particularly during European trading hours, although mixed data coming from the US put a lid to its gains. According to the official releases, Existing Home Sales fell by 2.2% in September, although the Richmond Fed Manufacturing Index improved in October to 8 from -9 in September, also beating the -14 expected.

This Wednesday, the EU will release October preliminary Consumer Confidence, foreseen at -6.7 from the previous -6.5, while the US will publish MBA Mortgage Applications for the week ended October 18. There are little chances that these figures could affect the pair’s behaviour.

EUR/USD short-term technical outlook

The EUR/USD pair extended its decline to 1.1117 on the back of Brexit drama, ending the day at around 1.1130. The short-term picture is bearish, as the pair has broken below the 20 SMA, which has now turned flat, while technical indicators have extended their declines, the Momentum already in negative ground and the RSI currently at 54. The bearish corrective movement seems poised to extend toward 1.1065, the 38.2% retracement of the latest daily advance. The upside seems capped by sellers aligned around 1.1180.

Support levels: 1.1100 1.1065 1.1030

Resistance levels: 1.1180 1.1210 1.1250

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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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