EUR/USD Forecast: Sellers maintain the pressure as fears prevail

EUR/USD Current Price: 1.0548

• The poor performance of global stock markets continues to support the US Dollar.
• Investors await inflation updates from the Euro Zone and the United States.
• EUR/USD keeps posting lower lows, next support at 1.0520.

The EUR/USD pair extended its decline to fresh multi-month lows on Wednesday, as a prevalent dismal mood kept fueling US Dollar demand. The pair bottomed at 1.0534 during European trading hours, holding nearby early in the American session.

In the absence of relevant news, investors maintain the focus on the latest central banks’ announcements, which pointed to higher rates for longer as price pressures are still above acceptable levels. Furthermore, most major economies reported an uptick in inflationary levels in August, bringing back concerns about potential recessions.

Market participants await European and American inflation updates to be released in the upcoming days. Germany will release the preliminary estimate of the September Harmonized Index of Consumer Prices (HICP) on Thursday, foreseen at 4.6% YoY from 6.4% in the previous month. At the same time, the United States (US) will publish the final estimate of its Q2 Gross Domestic Product (GDP), expected to confirm the economy grew 2.1% in the three months to June.

On Friday, it will be the turn for the Euro Zone to release the preliminary estimate of the September HICP, while the US will publish the August Personal Consumption Expenditures (PCE) - Price Index, with the core annual reading expected at 3.9%, declining from the 4.2% previous.

Meanwhile, stock markets maintain their bearish bias, extending their weekly slides. US government bond yields eased from their recent multi-year peaks, with the 10-year Treasury note currently offering 4.53%.

Data-wise, Germany published the October Gfk Consumer Confidence Survey, which resulted in -26.5, worsening from the previous -25.6. The EU reported that the M3 Money Supply plunged to -1.3% YoY in August, worse than anticipated. The US published August Durable Goods Orders, which rose 0.2% MoM, better than the 0.5% decline expected.

EUR/USD short-term technical outlook

The US Dollar retains its strength post-release, heading into Wall Street’s opening with a firm tone. The EUR/USD pair is down for the fourth consecutive straight day, and technical readings suggest further slides ahead. The 20 Simple Moving Average (SMA) accelerated its decline below the longer ones, heading south almost vertically just below the 1.0700 mark. At the same time, technical indicators slid with uneven strength within negative levels, reflecting sellers’ dominance.

The 4-hour chart offers a similar picture, with EUR/USD developing far below bearish moving averages, in line with a downward extension. Furthermore, technical indicators maintain their firmly bearish slopes around oversold readings without signs of downward exhaustion. Another leg south could be expected on a break below 1.0520, the immediate support level.

Support levels: 1.0520 1.0480 1.0440

Resistance levels: 1.0575 1.0620 1.0660

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