EUR/USD Forecast: Another leg lower as the Dollar holds firm
- US Dollar Index hits fresh monthly highs above 106.00.
- Euro slid during the American session despite Lagarde's comments.
- The EUR/USD slid for the fifth consecutive day, posting its lowest close since March.
The EUR/USD broke below 1.0630 and tumbled to 1.0574, reaching the lowest since March. The Euro continues to decline, posting its fifth consecutive daily loss. On Monday, while the US Dollar remains strong overall, the Euro came under pressure.
Data from the Eurozone on Monday included the German IFO survey, which showed a smaller-than-expected decline. No significant data is scheduled from the Eurozone on Tuesday, and the critical report of the week will be the release of inflation figures starting on Thursday.
European Central Bank (ECB) President Christine Lagarde mentioned to lawmakers at the European Parliament that interest rates will remain elevated for as long as necessary to control inflation. However, her comments did not support the Euro, which slid to daily lows across the board following her testimony.
The US Dollar Index briefly reached levels above 106.00, the highest level since March. The Greenback remains supported by higher US Treasury yields. The 10-year yield rose to its highest level since 2007 at 4.52%.
US data released Monday showed the Chicago Fed National Activity Index dropping to -0.16 in August from 0.07 in July, and the Dallas Fed manufacturing activity survey falling to -18.1 in September from -17.2 in August. On Tuesday, the economic calendar includes data on housing prices, consumer confidence, and New Home Sales.
EUR/USD short-term technical outlook
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The EUR/USD dropped below 1.0600 for the first time in months, breaking the critical support at 1.0630. With the price below that level, further losses are likely. The daily chart indicates that the pair is heading towards the area between 1.0510 and 1.0530, representing the February and March lows.
On the 4-hour chart, a support area around 1.0560 could trigger a rebound. The levels of 1.0600 and 1.0630 have now become relevant resistance levels. A decline below 1.0550 could lead to increased volatility and a bearish acceleration. The Relative Strength Index (RSI) is below 30, and Momentum is at extremely low levels compared to recent readings, suggesting some consolidation ahead. However, the Euro would need to reclaim or remain around 1.0600 for a stronger stabilisation signal.
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Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
