EUR/USD settles below 0.9600 amid renewed dollar strength
The EUR/USD pair approaches its recent multi-year low of 0.9549 as fears took over markets during US trading hours. The escalating EU energy crisis adds pressure on the shared currency.
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The EUR/USD pair is down for a sixth consecutive day, and it seems poised to extend its slump. The Momentum indicator in the daily chart keeps heading firmly lower, well into negative levels, while the RSI has partially lost its downward strength and currently consolidates at around 24. Meanwhile, moving averages keep grinding lower, far above the current level, reflecting sellers’ dominance.
In the near term, and according to the 4-hour chart, the corrective advance has room to extend but lacks strength. Technical indicators moved away from extreme oversold levels but remain well below their midlines without clear directional momentum. Meanwhile, the 20 SMA maintains its bearish slope, providing dynamic resistance at around 0.9710 and far below the longer ones.
Support levels: 0.9550 0.9505 0.9470
Resistance levels: 0.9630 0.9680 0.9725
The EUR/USD pair started the day positively, but gave up after Wall Street’s opening and resumed its slide, currently trading near the multi-year low set earlier this week at 0.9549.
Several factors affected the pair. On the one hand, the shared currency eased amid a steepening European energy crisis. Several leaks were detected in the Nord Steam pipelines, and according to Gazprom, it is impossible to estimate when the gas transportation will be restored. "This is not a small crack. It's a really big hole," said the Danish Energy Agency, while the Danish government noted that sabotage could not be discarded.
On the other hand, the greenback strengthened on the back of better-than-anticipated US data. August Durable Goods Orders contracted 0.2% in the month, better than the 0.4% setback expected but worse than the previous -0.1%. The core reading, Nondefense Capital Goods Orders ex Aircraft, came much better than anticipated, up 1.3%. Also, CB Consumer Confidence improved to 108 in September, better than the 104 anticipated by market participants.
US Federal Reserve officials tried to pour cold water into the dollar’s recent strength. Fed’s Charles Evans said he was getting concerned about going too far, too fast with rate hikes but added that his outlook is in line with the Fed's median assessment of rates at 4.25-4.50% at the end of 2022 and at 4.6% end of next year. Neel Kashkari said the central bank is moving “very aggressively” and that there is a high risk of “overdoing it.” Regardless of their comments, Wall Street sold off, further fueling the greenback.
On Wednesday, European Central Bank President Christine Lagarde will participate in the Frankfurt Forum on US-European GeoEconomics, while US Federal Reserve chief Jerome Powell will deliver the opening remarks in a pre-recorded video at the Community Banking Research Conference. The US will also release the August Trade Balance and Pending Home Sales for the same month.
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