EUR/USD Forecast: In tin-hat mode, waiting for the hammer to send it below $1.1800

The EUR/USD failed to stage a meaningful recovery and fell to a new 2018 low, close to 1.1800.
Italy's new government and a confirmation of low inflation prepare the ground for another fall.
Oversold conditions may provide some relief temporary relief.

Yohay Elam FXStreet

The EUR/USD is trading around $1.1810, stable in the new, low range. Final euro-zone inflation figures confirmed the initial weak numbers in April: 1.2% on the headline and 0.7% on the core. The figures did not surprise but they serve as a reminder that the caution expressed by Mario Draghi, the President of the European Central Bank is justified. The exit from the stimulus may be slow.

And from the Italian central banker to Italy: the third-largest economy in the euro-zone is on the verge of having a new government. The League and the 5-Star Movement dropped the initial ideas of not paying €250 billion in debt and thoughts of leaving the euro-zone. This change calms investors but worries could resurface.

US Treasury yields remain on the high ground, around 3.06% at the time of writing after approaching 3.10% on Tuesday. The rise in the global benchmark boosted the US Dollar. A potential rise in yields in the US session could provide fresh fuel for the US Dollar to rise.

The US releases Building Permits, Housing Starts, and Industrial Output later on. None of the figures stands out on its own, but if all of them go in the same direction, the greenback will likely feel the impact. On Tuesday, upward revisions in Retail Sales served as a pretext to buy the US Dollar.

EUR/USD Technical Analysis

The EUR/USD fell off the uptrend line that accompanied its recovery (thick black on the chart) and this is a bearish sign. The pair also remains below the 200-day Simple Moving Average which is around $1.2010. Momentum remains strong to the downside. The RSI points to oversold conditions, but these are not extreme ones and the pair proved it can continue falling even under such conditions.

Looking down, $1.1760 is a convergence of various lines, as seen by the Confluence Detector. Further down, the $1.1715 level supported the pair in late 2017. The round number of $1.1700 follows.

On the upside, $1.1850 capped the pair in a recovery attempt earlier in the day. The January low of $1.1915 is next, and the round number of $1.2000 looms above.

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.