EUR/USD Price Forecast: Sellers pause ahead of FOMC Minutes

EUR/USD Current price: 1.1634

• Market players await fresh clues from Federal Reserve’s officials.
• French deficit crisis continues to undermine demand for the EUR.
• EUR/USD bounced modestly after flirting with the 1.1600 mark.

The EUR/USD pair fell towards the 1.1600 level during European trading hours on Wednesday, as demand for the US Dollar (USD) continues on the back of a dismal market mood. The Greenback lost some ground ahead of the American opening, with the pair currently trading at around the 1.1630 level, still down for the day.

Market’s concerns revolve around the extended United States (US) government shutdown, but also around the French crisis, as the country seems unable to find a Prime Minister who can resolve the country’s massive debt.

Meanwhile, fresh headlines related to the European Union (EU) and the US trade relationship weighed on the Euro. According to people familiar with the matter, Bloomberg reported that fresh US demands for concessions could undermine the recent trade agreement.

Other than that, market participants are eager to hear from Federal Reserve (Fed) officials. On the one hand, the Federal Open Market Committee (FOMC) will release the minutes of the September meeting. On the other hand, different policymakers will hit the wires, participating in different public events. Also in the American afternoon, the European Central Bank (ECB) President, Christine Lagarde, is due to speak in a pre-recorded video at an academic event hosted by the Luxembourg Chamber of Commerce.

Speculative interest hopes Fed speakers could shed some light on upcoming monetary policy decisions. A 25 basis points (bps) interest rate cut has been largely priced in, meaning investors will be seeking clues on potentially larger cuts.

EUR/USD short-term technical outlook

The EUR/USD pair trades in the red for the third consecutive day, and the risk of a downward extension has increased. In the daily chart, EUR/USD is struggling to remain above a mildly bullish 100 Simple Moving Average (SMA), challenging it for the first time since last March. The 20 SMA, in the meantime, gains modest downward traction well-above the current level. Finally, technical indicators extend their slides within negative levels, with uneven bearish strength, but still favoring lower lows ahead.

In the near term, and according to the 4-hour chart, EUR/USD corrects oversold conditions, but there are no signs the recovery could continue, as technical indicators are losing their upward slopes well below their midlines. Other than that, a firmly bearish 20 SMA heads firmly lower after crossing below the longer ones, usually a sign of increased selling interest.

Support levels: 1.1590 1.1550 1.1510

Resistance levels: 1.1665 1.1710 1.1745