EUR/USD: Consolidative phase continues ahead of fresh clues

EUR/USD Current price: 1.1144

• The German IFO Survey showed the Business Climate deteriorated further in September.
• The United States will release September CB Consumer Confidence.
• EUR/USD lacks directional momentum, downside limited by broad US Dollar weakness.

The EUR/USD pair keeps trading uneventfully a handful of pips above the 1.1100 mark on Tuesday, as bad news from Europe undermined demand for the Euro. Germany published the IFO survey on Business Climate, which fell in September to 85.4 from the 86.6 posted in August. The assessment of the current situation deteriorated to 84.4, while expectations declined to 86.3, as expected.

Financial markets were cautious at the beginning of the day as China announced a series of measures to support the battered economy. The People’s Bank of China (PBoC) will cut the Reserve Requirement Ratio (RRR) by 50 basis points (bps) in the near term, and they will cut the seven-day repo rate by 0.2%. Finally, the central bank outlined plans to support the property market, which included cutting the interest rates on mortgages. Nevertheless, stock markets remained afloat throughout the Asian and European sessions.

The upcoming United States (US) session will bring  September CB Consumer Confidence, which is expected to improve modestly from the previous 103.3, and the Richmond Fed Manufacturing Index for the same month.

EUR/USD short-term technical outlook  

The EUR/USD pair trimmed half of its Monday’s losses, and the daily chart shows the pair has a limited bullish scope while a steeper decline remains out of the picture. Technical indicators hold within positive levels although without clear directional strength and below their recent highs, reflecting the ongoing consolidative stage. At the same time, a flat 20 Simple Moving Average (SMA) provides dynamic support at around 1.1090. Finally, the 100 SMA gains upward traction after crossing above the 200 SMA, both far below the shorter one.

The 4-hour chart shows the pair is neutral-to-bearish in the near term. A flat 20 SMA caps advances at around 1.1150, while the 100 SMA aims marginally higher at around 1.1090, reinforcing the support area. Technical indicators, in the meantime, head modestly lower below their midlines, reflecting the absence of buying interest rather than supporting an upcoming slide.

Support levels: 1.1090 1.1050 1.1010

Resistance levels: 1.1160 1.1200 1.1250