EUR/USD Forecast: Ready to pierce the monthly low

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1763

Concerns about economic growth hit the financial world amid a second coronavirus wave in the EU.
US Federal Reserve chief Powell set to speak later today, but no relevant comments expected.
EUR/USD is bearish and about to break below the current September low.

The EUR/USD pair has fallen to 1.1763 during European trading hours, as local indexes plunged, spurring risk aversion. The dollar strengthened even against safe-haven gold and CHF, with the Japanese currency being the only one appreciating against the American currency. The sour sentiment is the result of a second coronavirus wave hitting the EU and local lockdowns announced. The sour sentiment was exacerbated by news that a second participant in AstraZeneca trials of a vaccine has developed serious neurological symptoms.

German FinMin Scholz said this Monday that German debt will likely reach the 80% of the GDP, and subtle referred to EUR’s appreciation, as he added that the ECB is currently faced with a strengthening currency. Meanwhile, ECB’s Lagarde said that the Union’s economic recovery remains “very uncertain, uneven and incomplete.”

The US published the August Chicago Fed National Activity Index, which came in at 0.79, missing expectations of 1.95. Later today, several FOMC members will speak today, including chair Powell, although he is not due to referring to monetary policy.

EUR/USD short-term technical outlook

The EUR/USD pair trades near the mentioned daily low and seems poised to extend its decline as risk-off keeps leading the way. From a technical point of view, the 4-hour chart shows that it has extended its slump below all of its moving averages, with the 20 SMA extending below the larger ones. Technical indicators head lower, although with uneven strength. The Momentum remains within positive levels, as the pair remains above its monthly low at 1.1736, the immediate support.

Support levels: 1.1735 1.1690 1.1650

Resistance levels: 1.1795 1.1830 1.1875

View Live Chart for the EUR/USD

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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.

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