EUR/USD Price Forecast: Recovering within range amid persistent optimism

EUR/USD Current price: 1.1784

• The United States and China agreed on the usage of the TikTok app in the US.
• The Eurozone will release September Consumer Confidence during the American session.
• EUR/USD in recovery mode, additional gains in the near term still unclear.

The US Dollar enjoyed some near-term demand at the weekly opening, but quickly changed course. As a result, the EUR/USD pair is up on Monday, trading around 1.1780 and up from an early low of 1.1726. Financial markets kick-started the week with moderated optimism amid encouraging news in the US-China trade front.

Over the weekend, Washington and Beijing reached an agreement on the usage of the TikTok app in the United States (US). The White House announced on Saturday that US companies will now control the app. Data and privacy aspects of the platform will be in the hands of Oracle, the software and cloud computing company, while Americans will hold six of seven board seats for the app’s US operations.

The agreement is far from a trade deal between the two world giants, but it is enough to boost investors’ confidence. Market players are no longer betting on massive reciprocal tarifs, and the associated risk of worldwide inflationary pressures. Hence, financial boards trade on relief. Other than that, the fact that the Federal Reserve (Fed) has actually lowered interest rates and anticipates lower rates ahead weighs positively on sentiment, as it means lower borrowing costs in the future. The impact may take time, but in the end, it will come.

Other than that, the macroeconomic calendar will feature a slew of Fed and European Central Bank (ECB) speakers. The US already published the Chicago Fed National Activity Index, which improved in August to -0.12 from a previously revised -0.28, while the EU will release the preliminary estimate of September Consumer Confidence.

EUR/USD short-term technical outlook

From a technical point of view, the daily chart for the EUR/USD pair shows it trimmed all of its Friday’s losses, after finding buyers around a mildly bullish 20 Simple Moving Average (SMA) at 1.1720. The 100 and 200 SMAs offer modest upward slopes far below the shorter one, in line with the broad USD weakness. Finally, technical indicators bounced from near their midlines and offer modest upward slopes within positive levels, albeit far below the previous week's peak.

In the near term, and according to the 4-hour chart, the intraday recovery from early lows is not enough to confirm additional EUR/USD gains. The recovery stalled just ahead of a bearish 20 SMA, while technical indicators aim higher, yet remain within negative levels. The 100 SMA provided intraday support, now standing at around 1.1725, reinforcing the relevance of the support area.

Support levels: 1.1760 1.1720 1.1670

Resistance levels: 1.1810 1.1845 1.1890