EUR/USD Current price: 1.0887
After falling to a fresh multi-month low of 1.0850, the EUR/USD pair bounced back mid American session, although the recovery was one again contained by selling interest around the 1.0900 figure. The pair has been trading within a tight 50 pips range ever since the week started, and in spite of some interesting headlines released this Tuesday, the pair was unable to leave it. Firstly, Germany released its IFO survey which showed that business sentiment rose to the highest in over two years in October, as the index climbed to 110.5 from previous 109.5, indicating that the German economic recovery keeps gathering momentum. The common currency, however, was unable to attract buyers after the release.
As for the US, the S&P house price index showed that that home prices continued their rise across the country over the last 12 months up by 5.1% in August when compared to a year earlier. Consumer confidence in October, on the other hand, fell to 98.6 from a previously revised 103.5, although the report remarks that "sentiment is that the economy will continue to expand in the near-term, but at a moderate pace.” Also, ECB's Draghi spoke at the German Institute for Economic Research in Berlin, said that the central bank would certainly prefer not to have to keep interest rates "at such low levels for an excessively long time," acknowledging the cost of its ultra-loose monetary policy.
Overall, the dollar remains strong, particularly against its European rivals and the yen, despite the intraday setback triggered by the decline in consumer confidence. While the EUR/USD pair may correct higher from current levels, the bearish potential is still quite strong, with scope to break below the 1.0800 level and extend down to 1.0500/600. From a technical point of view and in the short term, the 4 hours chart shows that the price is standing a few pips above a bearish 20 SMA, while the RSI indicator bounced from oversold readings and the Momentum indicator entered positive territory with a sharp upward slope, supporting some short term gains on an extension beyond 1.0910, the immediate resistance.
Support levels: 1.0840 1.0800 1.0760
Resistance levels: 1.0910 1.0950 1.1010
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