EUR/USD Forecast: Near-term buyers fight back
EUR/USD Current Price: 0.9896
- The EU announced a new round of sanctions on Russia, spurring risk aversion.
- Upbeat US data underpinned the greenback but also supported Wall Street.
- EUR/USD lost the 0.9900 threshold, but further slides are not yet clear.
After the EUR/USD pair was unable to regain parity early Wednesday, it ended up losing over 100 pips to close the day in the 0.9890 price zone. The dollar benefited from a deteriorated market mood and better-than-anticipated US data, posting gains against most of its major rivals. One of the reasons the market flipped negatively was mounting tensions between Russia and the EU after the latter announced a new round of sanctions on Moscow, which includes price caps on crude oil and refined products.
The decision weighed particularly on the EUR as the Union has been under siege since Russia invaded Ukraine. The continent's dependence on Moscow’s gas provision has led to a major energy crisis as Russia responded by cutting supplies.
Macroeconomic figures added pressure on the shared currency as S&P Global downwardly revised the September Services PMIs for the EU. The German index fell to 45, while the EU one dipped into contraction territory, down from 48.9 to 48.8. The final EU Composite PMI resulted at 48.1.
On the other hand, the US published the August Goods and Services Trade Balance, which posted a deficit of $67.4 billion, better than anticipated. Additionally, the ADP Employment Change report showed that the private sector added 208K new jobs, beating the 200K forecast. Finally, the ISM Services PMI came in at 56.7, beating expectations. Encouraging news halted the dollar momentum as they helped stocks bounce from their early lows. Nevertheless, Wall Street trades mixed by the end of the day.
On Thursday, Germany will publish August Factory Orders, while the EU will release Retail Sales for the same month. The US calendar will include employment-related figures relevant ahead of the Nonfarm Payrolls report to be out on Friday.
EUR/USD short-term technical outlook
The EUR/USD pair is currently struggling to maintain ground above the 50% retracement of the 1.0076/0.9535 slide at 0.9865, an immediate support level. In the daily chart, it is now battling with a mildly bearish 20 SMA, but still far below the longer ones, in line with the increased selling interest. Also, technical indicators have retreated from around their midlines, heading sharply lower within negative levels.
The near-term picture shows that bulls are fighting back. The pair is holding above a bullish 20 SMA, which crossed above a mildly bearish 100 SMA. At the same time, technical indicators are recovering from around their midlines, although without enough strength to confirm further gains ahead.
Support levels: 0.9865 0.9820 0.9770
Resistance levels: 0.9950 0.9995 1.0035
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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.
