EUR/USD Forecast: En route to test the year low

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1712

News coming from China exacerbate concerns about the global economic comeback.
The German Producer Price Index jumped to 12% YoY in August.
EUR/USD bounced modestly from around 1.1700, remains at risk of falling.

The EUR/USD pair battles around the 1.1700 level as the greenback firms up in a risk-averse environment. The dismal mood comes from China, more precisely, from the Evergrande Group, which is China's second-largest property developer by sales. Shares of the company plummeted at the weekly opening by over 10%, as the company faces a possible default. Concerns revolve around Evergrande’s $305 billion of liabilities that may hurt the country’s financial system.

At the same time, market participants turned cautious ahead of the US Federal Reserve’s monetary policy decision next Wednesday. Global stocks are sharply down, with US indexes poised to open dip in the red. Government bond yields are stable, with US Treasury yields ticking marginally lower.

Data-wise, the macroeconomic calendar has nothing relevant to offer on Monday. Germany published the August Producer Price Index, which was up by 1.5% MoM and 12% YoY, spurring mild concerns about inflationary pressures in the EU. The US will release the NAHB Housing Market Index, foreseen at 75 in September.

EUR/USD short-term technical outlook

The EUR/USD pair trades near this year low of 1.1663, oversold in the near term. The risk, however, remains skewed to the downside. In the 4-hour chart, the pair is developing below all of its moving averages, with the 20 SMA heading firmly lower below the longer ones. Technical indicators remain near daily lows, with the Momentum bouncing just modestly. Chances of a corrective advance are limited, while renewed selling pressure below 1.1700 should lead to a retest of the mentioned 2021 low.

Support levels: 1.1700 1.1660 1.1620

Resistance levels: 1.1755 1.1780 1.1820

View Live Chart for the EUR/USD

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

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.

EUR/USD makes a U-turn, focus on 1.1900

EUR/USD’s recovery picks up further pace, prompting the pair to retarget the key 1.1900 barrier amid further loss of momentum in the US Dollar on Wednesday. Moving forward, investors are expected to remain focused on upcoming labour market figures and the always relevant US CPI prints on Thursday and Friday, respectively.

GBP/USD sticks to the bullish tone near 1.3660

GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.

Gold holds on to higher ground ahead of the next catalyst

Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of modest losses in the US Dollar and despite firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.