EUR/USD Price Forecast: Sellers take the lead amid US political and fiscal noise

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1586

Tensions between US President Trump and the Federal Reserve weigh on the market’s mood.
A scarce macroeconomic calendar leaves financial markets at the mercy of sentiment.
EUR/USD trades near fresh two-week lows and looks to extend its slide.

The EUR/USD pair came under renewed selling pressure throughout the first half of the day, falling to a fresh two-week low of 1.1574 during European trading hours. The US Dollar (USD) trades with a firmer tone across the FX board, despite mounting tensions between United States (US) President Donald Trump and the Federal Reserve (Fed).

Trump decided earlier this week to oust Fed Governor Lisa Cook, amid allegations of mortgage fraud. The White House movement aims to influence the Federal Open Market Committee (FOMC), the Fed’s governing board, and secure a majority of loyal governors who will support Trump’s demand for significantly lower interest rates. That clearly goes against the Fed’s independence.

Fed Governor Cook would likely challenge her removal in court, but before any definition of the matter is established, markets would remain concerned. One of the main issues here is that, if the Fed pleases Trump by lowering rates more quickly and faster than planned, the economy could overheat and, hence, revive inflationary pressures.

On the data front, Germany published the GfK Consumer Confidence Survey, which fell in September to -23.6 from a revised -21.7 in the previous month, also missing expectations of -21.5. Across the pond, the US released MBA Mortgage Applications, which declined by 0.5%. The macroeconomic calendar will remain empty for the rest of the day, meaning the focus will remain on US political and fiscal woes.

Also, Bloomberg reported that the European Union (EU) is looking to quicken its move to pass the legislation to remove all tariffs on US industrial goods. “The bloc seeks to meet Trump's demands before the US would even consider lowering tariffs on EU autos,” according to people familiar with the matter.

EUR/USD short-term technical outlook

The EUR/USD pair bounced from the mentioned intraday low and trades just shy of 1.1600 early in the American session. Nevertheless, the pair has a bearish tilt according to technical readings in the daily chart. The daily chart shows that the 20 Simple Moving Average (SMA) has been pierced, now turning into a dynamic resistance at around 1.1630. The 100 SMA, in the meantime, loses its bullish strength at around 1.1500. Finally, technical indicators maintain their firmly bearish slopes within negative levels, and at their lowest in nearly a month.

The near-term picture is also bearish. The 4-hour chart shows the pair trades well below all its moving averages, which, anyway, remain directionless and confined to a tight range between 1.1630 and 1.1650.

Support levels: 1.1620 1.1570 1.1530

Resistance levels: 1.1700 1.1740 1.1785

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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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