EUR/USD analysis: moving closer to 1.1600 on dollar's weakness

EUR/USD Current price: 1.1584

  • US inflation missed expectations in September, adding pressure on the greenback.
  • US Michigan Consumer Confidence forecasted at 100.4 for October.

The EUR/USD pair peaked at 1.1599, and the following retracements were contained by buying interest around 1.1550, holding by the end of the US session near the mentioned high. Wall Street's plunge extended into Asian and European markets, while American equities continued falling, although to a lesser extent this Thursday. The main market motor were US Treasury yields, which were sharply down after US President Trump accused the Fed of going crazy for raising interest rates at the current, too fast for Trump, pace.  Further affecting yields, and therefore the greenback, was US inflation, which missed expectations in September, advancing by just 0.1% MoM and with the yearly reading printing 2.3%, both figures also below the previous month readings. US core yearly inflation came in at 2.2%, matching August print. The yield on the benchmark 10-year Treasury note fell to 3.14%, to finally settle around 3.16%, while the 2-year note yield finished at around 2.86%, down from 2.90% Wednesday. Friday will bring German September CPI, EU August Industrial Production, and the US October preliminary Michigan Consumer Sentiment Index, foreseen at 100.4 vs. 100.1 in September.

 The EUR/USD pair is advancing beyond the 38.2% retracement of the 1.1793/1.1431 decline, retaining a short-term bullish stance according to readings in the 4 hours chart, as it's developing above a bullish 20 SMA, which now nears the 23.6% retracement of the mentioned decline, as technical indicators continue heading north, the Momentum  as fresh multi-week highs but the RSI within its recent highs, at around 62. In the same chart, the 100 SMA is now nearing the 50% retracement of the mentioned slide at 1.1615, while the 200 SMA lies a few pips above it, making of the 1.1610/20 region a strong resistance area. If the pair is able to broke above it, the rally could extend past 1.1700 ahead of the weekly close, moreover if US data disappoints.

Support levels: 1.1550 1.1520 1.1490

Resistance levels: 1.1615 1.1660 1.1700

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