EUR/USD Forecast: Poised to challenge a critical resistance level

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1862

Dollar in sell-off mode amid renewed optimism about a US stimulus package.
US Treasury yields advanced to fresh multi-week highs, play against the greenback.
EUR/USD is technically bullish and could regain the 1.1900 threshold.

The EUR/USD pair has extended its weekly advance to 1.1870 this Wednesday, amid persistent dollar’s weakness. Overnight, talks about a US stimulus aid package provided support to the high-yielding EUR, as US Treasury Secretary Steven Mnuchin and House Leader Nancy Pelosi reported progress in trade talks, and said they would continue negotiations this Wednesday.

The greenback remained under pressure, despite the sour tone of equities, with European indexes in the red, dragging US futures lower. A sign of diminished dollar’s demand comes from government bonds, as US Treasury yields are sharply up and at fresh multi-week highs.

The macroeconomic calendar has no saying in price action, particularly considering there’s only minor data in the docket. The EU didn’t publish relevant numbers, while the US unveiled MBA Mortgages Applications for the week ended October 16, which were down 0.6%.

EUR/USD short-term technical outlook

The EUR/USD pair is poised to challenge the mentioned high, also a static resistance level. The 4-hour chart shows that the advance extended above all of the moving averages, while the 20 SMA accelerated north and crossed above the larger ones. Technical indicators, in the meantime, maintain their bullish slopes, despite being in overbought territory. A break through 1.1870 should see the pair regaining the 1.19 threshold during the upcoming sessions.

Support levels: 1.1830 1.1780 1.1740

Resistance levels: 1.1870 1.1915 1.1950

View Live Chart for the EUR/USD

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.

AUD/USD climbs toward 0.7000 after strong China data dump

AUD/USD attracts follow-through buyers for the second straight day on Monday, extending last week's recovery toward 0.7000 in Monday's Asian trading. Strong Chniese Q3 GDP and activity data for September strengthen the pair's advance, following RBA Assistant Governor Chris Kent's hawkish remarks.

USD/JPY struggles near 158.00 amid hawkish BoJ, subdued USD

USD/JPY remains defensive near 158.00 in the Asian session on Monday, as the US Dollar remains depressed near a two-week low amid the recent decline in US bond yields. Furthermore, looming intervention risks underpin the Japanese Yen and weigh on the pair amid BoJ Governor Kazuo Ueda's hawkish remarks. However, Fed rate-hike bets and geopolitical uncertainties could limit USD losses and the major.

Gold holds firm below $4,200 on falling US yields

Gold holds gains but remains below the $4,200 mark in the European session on Monday. US Federal Reserve Chair Kevin Warsh’s unwillingness to provide any cues on further policy moves led to a reduction in odds for policy tightening later this month. Moreover, the recent sharp retracement slide in US government bond yields from multi-year highs, acts as a tailwind for the non-yielding bullion.

Cardano risks 15% downside as retail demand, bullish momentum wane

Cardano (ADA) is trading above $0.2200 at press time on Monday, holding steady after a 12% decline the previous week. The altcoin is losing retail interest as the notional value of active ADA futures positions declines. The technical outlook for ADA suggests a downside bias following the bearish breakout below a near-term support trendline last week.

What to expect in the week ahead

Investors are still digesting last week’s price action as we start a new week. US stocks sold off sharply, with the Swiss and UK indices attracting inflows as tech sold off. Sovereign bonds, particularly Treasuries, rallied and acted as a safe haven as the AI trade suffered another bout of volatility.

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.