EUR/USD Forecast: Dollar up as yields soar
EUR/USD Current Price: 0.9968
- US government bond yields extend their bullish route to fresh multi-month highs.
- European data was quite disappointing, with the German PPI up to 45.8% YoY in August.
- EUR/USD accelerates its slide below parity and approaches the 0.9950 support level.
The EUR/USD pair keeps trading within familiar levels as the wait-and-see mood continues. However, the market mood is sour, giving the dollar some advantage against its European rival. Still, volatility is limited as investors await central banks´ announcements, starting Wednesday with the US Federal Reserve but later extending with the Bank of Japan, the Switzerland National Bank, and the Bank of England. Caution prevails in such a scenario, as some of these central banks may bring surprises to the trading board.
Meanwhile, the greenback is finding support in raising US government bond yields. The 10-year Treasury note yields 3.55%, while the 2-year note offers 3.96%. Wall Street is down ahead of the opening, as European indexes are unable to post gains.
On the data front, bad news came from Europe. The German Producer Price Index rose by 45.8% YoY in August from 37.2% in the previous month. Additionally, the EU seasonally adjusted Current Account posted a deficit of €19.86 billion in July. Across the pond, the US published August Building Permits, which fell by 10% in the month, and Housing Starts for the same period, up 12.2%.
EUR/USD short-term technical outlook
The EUR/USD pair is down within range, bearish according to the daily chart. The slide is currently extending below a directionless 20 SMA, although the longer moving averages keep heading firmly lower, far above the current level. Technical indicators, in the meantime, have turned south within negative levels, reflecting increased selling interest.
In the near term, and according to the 4-hour chart, the risk also skews to the downside. The pair has fallen below its 20 and 100 SMAs, converging around parity. The Momentum indicator turned south within neutral levels, but the RSI indicator accelerated its slide and currently stands at around 42, anticipating additional declines once the pair breaks below 0.9950, the immediate support level.
Support levels: 0.9950 0.9910 0.9860
Resistance levels: 1.0005 1.0045 1.0090
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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.
