EUR/USD Price Forecast: Sell-off paused, pressure remains

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1637

Soaring United Kingdom government yields fueled demand for the US Dollar across the FX board.
The EU Harmonized Index of Consumer Prices rose by more than anticipated in August.
EUR/USD pared its slide near 1.1600, near term risk skewed to the downside.

The EUR/USD pair edged sharply lower on Tuesday, with the pair coming under strong selling pressure during European trading hours amid resurgent US Dollar (USD) demand. Markets turned risk-averse amid turmoil in the United Kingdom (UK).

The 30-year UK government yield hit 5.680%, its highest level since 1998. The news came as Chancellor Rachel Reeves prepares to present the Autumn Budget. Concerns center on the increased expectations that Reeves would need to raise taxes and cut spending to meet her financial targets. The news triggered a run to safety, boosting Gold demand and pushing the bright metal into fresh record highs.

Other than that, the Euro (EUR) took a hit from local inflation data. The Eurozone Harmonized Index of Consumer Prices (HICP) rose by more than anticipated in August, up 2.1% on a yearly basis. The core annual figure printed at 2.3%, matching the July reading yet above the expected 2.2%. The monthly HICP came in at 0.2%, up from the 0% posted in July.

The United States (US) will soon release the August ISM Manufacturing Purchasing Managers’ Index (PMI). The index is expected to print a modest improvement, foreseen at 49 after printing at 48 in July. Also, S&P Global will release the final estimate of its own Manufacturing PMI for the same month, expected to be confirmed at 53.3.

EUR/USD short-term technical outlook

The EUR/USD pair remains under pressure and approaches the 1.1600 mark, with the daily chart showing that the pair broke below a now flat 20 Simple Moving Average (SMA) while technical indicators gain downward traction after piercing their midlines. Indicators still hover in what we could call neutral territory, but still favors another leg south. Finally, it is worth adding a mildly bullish 100 SMA stands in the 1.1510 region, becoming a potential bearish target slump.

In the near term, and according to the 4-hour chart, EUR/USD seems to be decelerating its slump, but the risk remains skewed to the downside. The pair is currently trading below all its moving averages, which have turned directionless. The 200 SMA stands a few pips above the current level, at 1.1640, while the shorter one remains above the longer ones, somehow suggesting a limited bearish scope. Technical indicators, in the meantime, turned flat within negative levels, reflecting investors’ pause ahead of the next catalyst.

Support levels: 1.1590 1.1550 1.1510

Resistance levels: 1.1660 1.1700 1.1745

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

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.

EUR/USD onsolidates around mid-1.1800s as traders keenly await FOMC Minutes

The EUR/USD pair struggles to capitalize on the previous day's goodish rebound from the 1.1800 neighborhood, or a one-and-a-half-week low, and consolidates in a narrow band during the Asian session on Wednesday. Spot prices currently trade just below mid-1.1800s, nearly unchanged for the day.

GBP/USD seems vulnerable near mid-1.3500s; UK CPI/FOMC Minutes awaited

The GBP/USD pair struggles to capitalize on the previous day's late rebound from an over one-week low – levels below the 1.3500 psychological mark – and trades with a negative bias for the third consecutive day on Wednesday. The downside, however, remains cushioned as investors seem reluctant to place aggressive directional bets ahead of the release of the latest UK consumer inflation figures and FOMC Minutes.

Gold regains positive traction after Tuesday's over 2% slump as traders await FOMC Minutes

Gold gains some positive traction during the Asian session on Wednesday and recovers a part of the previous day's heavy losses more than 2%, to the $4,843-4,842 region or a nearly two-week low. The intraday move higher could be attributed to repositioning trade ahead of the release of the FOMC Minutes.

Top Crypto Gainers: Jito drops, Morpho holds steady, Convex Finance climbs

Decentralized Finance tokens, including Jito, Morpho, and Convex Finance, rank among the top-performing crypto assets over the last 24 hours. Jito dips on Wednesday after rallying 22% the previous day on the launch of a new mainnet node.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.