EUR/USD Forecast: Battling to retain the 1.1600 level

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1604

US Initial Jobless Claims contracted to 293K, beating expectation in the week ended October 8.
The market mood is in better shape, with US indexes poised to open higher.
EUR/USD may resume its decline and reach fresh yearly lows.

The EUR/USD pair trades around the 1.1600 threshold, retreating from an intraday high of 1.1623. The greenback started the day on the backfoot, although it seems better poised heading into the US opening, particularly against its European rival. Elsewhere, the market’s mood seems to be improving. European indexes are up, leading to a nice bounce in Wall Street. At the same time, US government bond yields keep leading the way, currently hovering around their closing levels.

The EU did not publish relevant macroeconomic data, but the US published the September Producer Price Index, which was up 0.5% MoM and 8.6% YoY, higher than the August readings although below the market’s expectations. Also, Initial Jobless Claims for the week ended October 8 printed at 293K, much better than the 319K expected.

EUR/USD short-term technical outlook

The EUR/USD pair may have well completed a bullish corrective movement, according to the daily chart. It shows that the intraday rally stalled just ahead of a firmly bearish 20 SMA, while the longer ones maintain their bearish slopes far above it. Technical indicators remain within negative levels, with the RSI flat at around 41, indicating decreased buying interest.

The near term picture is similar, as the 4-our chart shows that sellers appeared around a mildly bearish 100 SMA, while technical indicators retreat from near overbought readings. Meanwhile, the 20 SMA aims marginally higher at around 1.1550, providing dynamic support. The risk will turn to the downside, with fresh lows at sight on a break below the latter.

Support levels: 1.1550 1.1520 1.1475

Resistance levels: 1.1640 1.1685 1.1730

View Live Chart for the EUR/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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