EUR/USD Forecast: Good reasons to hold onto the triple bottom (for now)

EUR/USD struggles to recover after tumbling down on Monday.
Optimism on the government shutdown and trade may help.
The triple-bottom is critical to the pair's next move.

Yohay Elam FXStreet

EUR/USD is trading below 1.1300, unable to recover from Monday's fall. The pair dropped on growing yield differential between falling German bund yields and rising US ones. Bond yields reflect a growing divergence between more and more signs of an economic slowdown in Europe and a resilient American economy.

It also represented concerns about the US government shutdown and trade talks between the US and China. And on these fronts, there have been positive developments that support a risk-on atmosphere, thus potentially pushing euro/dollar higher.

Democrats and Republicans in the Senate reached a compromise on funding for border security. The funds for a 55-mile barrier were agreed upon by Senators and were endorsed by House Speaker Nancy Pelosi. President Trump will reportedly also support it, thus opening the door to keeping the government open beyond the deadline on Friday.

Trump did not directly address the topic but did express hope on clinching a deal with China. His optimism in a rally in Texas also helped improve the sentiment.

The economic calendar remains light for another day, at least in the European session. The US JOLTs jobs report will be of some interest and the primary event of the day is due at 17:45 GMT. Fed Chair Jerome Powell will deliver a speech in Mississippi. It is unclear if he will address the current economic situation as his talk is titled "Economic Development in High Poverty Rural Communities."

All in all, sentiment related to trade and the shutdown will likely set the tone for the day.

EUR/USD Technical Analysis

We are using the daily chart today instead of the four-hour one, to provide a broader picture. The triple-bottom stands out, just below 1.1270. The level cushioned the pair in November, December, and February, and is a critical line of support.

Breaching the triple-bottom opens the door to the 2018 trough at 1.1215. Further support awaits only at 1.1115, which dates back to June 2017, 20 months ago.

Looking up, the immediate cap is at 1.1290 that was the low point in January. Close by, 1.1315 was a swing low in early January. 1.1330 and 1.1350 follow. The 50-day Simple Moving Average comes out just under the round number of 1.1400 and serves another point of resistance.

The Relative Strength Index on the daily chart leans lower but has not fallen below 30, thus not reflecting oversold conditions. However, it tripped below the level on the four-hour chart. Momentum is clearly to the downside.

More: EUR/USD recovery? Not so fast – Confluence Detector

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.