EUR/USD: Bears break support on back to school day

The EUR/USD resumes its falls as US traders end their summer vacations.
Concerns about emerging markets, tariffs on China, and Italy weigh.
The technical charts show bears are regaining control.

Yohay Elam FXStreet

The EUR/USD is falling below 1.1600 on Tuesday after a slow-motion day on Monday. American traders are back to school after a long Labor Day weekend. The official end of the summer sees an increase in trading volumes and also a resumption of the trend: a stronger US Dollar.

The greenback is gaining ground on a risk-off atmosphere emerging from Emerging Markets. Argentina was the center of attention on Monday as President Mauricio Macri announced measures to stabilize the outflow of funds out of the nation and the fall of the Peso. The USD/ARS exchange rate ticked up in low-volume trading. The return of US traders will be the real test for the South American nation.

The Turkish Lira remains on the back foot despite fresh hopes for a significant rate hike on September 13th. Some euro-zone banks are exposed to Turkey. Indonesia and Brazil are additional sources of concern.

The troubles in Emerging Markets push the US Dollar higher on a risk-off atmosphere. The big elephant in the room remains the No. 1 Emerging Market and the world's second-largest economy: China. The US is set to impose whopping tariffs worth $200 billion of Chinese goods as early as Thursday. The move would serve as a severe escalation in the trade wars. US President Donald Trump cut off a planned media outing on Monday to make phone calls related to trade.

More: Trade wars: $200 billion is serious, 3 scenarios and currency reactions for the upcoming escalation

The euro-zone has some trouble of its own. Markit's Services PMI's published on Monday came out slightly below expectations. More importantly, uncertainty about Italy's budget plans is also a source of concern. Markets have been relatively calm about the euro zone's third-largest economy, but an announcement about breaking the euro area's budgetary rules may bring Italy to the forefront.

The US ISM Manufacturing PMI is published at 14:00 and serves as a hint towards the jobs report on Friday and also the sentiment around trade. See how to trade the event with the EUR/USD.

EUR/USD Technical Analysis

The EUR/USD lost the 200 Simple Moving Average on the four-hour chart. This is a bearish sign. The Relative Strength Index is still above 30, therefore not experiencing oversold conditions, adding to the downward bias. Momentum remains to the downside.

Support awaits at 1.1530 which was a low point on August 23rd. Further down we find 1.1495 that was a swing low a few days earlier. 1.1445 capped the pair in mid-August before the recent surge. 1.1365 and 1.1300 are next down the line.

1.1580 supported the pair on Monday and is an immediate line of resistance. 1.1625 capped was the top of the range yesterday. 1.1695 held the pair down late last week and it is followed by 1.1735 that was a peak back then.

More: EUR/USD goes back to school and could go down – Confluence Detector

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.