EUR/USD Forecast: Fears keep fueling dollar’s demand

EUR/USD Current Price: 1.1693

• EU´s Markit September PMIs showed an unexpected contraction in economic activity.
• US Federal Reserve Chair’s Powell will testify on the economic impacts of COVID-19.
• EUR/USD maintains its bearish bias and could lose the 1.1600 threshold.

The EUR/USD pair has broken lower this Wednesday, falling to a daily low of 1.1671, a fresh two-month low. The dollar’s appreciation continues amid concerns about global economic growth as a second wave of coronavirus hits Europe while the pandemic gives no sign of receding in the US. The shared currency came under renewed selling pressure following the release of Markit Services PMIs, as the September preliminary estimates showed that activity in the region fell into contraction territory. The EU index came in at 47.6 from 50.5 in August. Manufacturing output was mixed across the Union, with the index improving from 51.7 to 53.7.

After Wall Street’s opening, the Markit will publish the preliminary estimates of the US September PMIs. Manufacturing output is seen at 53.2 from 53.1 previously, while services activity is seen contracting to 54.7 from 55. Later in the day, US Federal Reserve Chair Powell will testify on the economic impacts of COVID-19 before the House Select Committee.

EUR/USD short-term technical outlook

From a technical point of view, the EUR/USD pair is biased lower. The 4-hour chart shows that attempts to recover ground are now being rejected by sellers around 1.1720. Technical indicators have barely corrected oversold readings before resuming their declines, reflecting strong selling interest. Meanwhile, the pair keeps developing below all of its moving averages, with the 20 SMA heading firmly lower below the larger ones.

Support levels: 1.1665 1.1620 1.1580

Resistance levels:  1.1730 1.1770 1.1810  

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