• EUR/USD is technically stretched on the upside, bears seek retest of support structure. 
  • US data will be under the spotlight in Fed blackout period. 

EUR/USD is trading on the backfoot, but holding around flat on the day as the US mid-day sees less volume to support the overnight bid. At the time of writing, EUR/USD is sat near 1.1800 and has travelled between a low of 1.170 and a high of 1.1817. 

The daily ATR of approximately 47 pips has been exhausted within the day's volatility and range so we can expect consolidation from here on until the US Consumer Price Index data on Tursday. While the Federal Reserve has left an emphasis on achieving their maximum employment goal, the US CPI data will still be an important event. With that being said, there are few expectations of a surprise.

Analysts at TD Securities argued that core CPI likely rose at its slowest pace since February. retail Sales on Thursday will take up some of the attention of the market, and so too will Jobless Claims which could anchor risk sentiment following a downbeat CPI reading if the other data proves to be the kind of data that will leave a taper announcement from the Fed on the table. 

EUR/USD weighed by hawkish Fedspeak

It is also Federal Reserve's blackout period,  so the most recent comments from speakers last week are of importance ahead of the Sep 21-22 FOMC meeting. Last week, most Fed officials sounded as if they are looking through the weak August jobs report and still want to taper this year, analysts at Brown Brothers Harriman argued. 

''Mester said Friday that 'I don’t think the August employment report has changed my view that we’ve made substantial further progress. I would like us to begin tapering sometime this year.' This followed similar comments from Williams, Bowman, and Kaplan last week,'' the analysts noted.

''Our best guess is that the Fed announces a formal timeline for tapering at the November 2-3 meeting and starts tapering at the December 14-15 meeting.  Sure, it’s possible the Fed waits until January but really, why wait?''

EUR/USD depends on the eurozone's recovery 

As for the domestic front, the European Central bank was a bit of a nonevent in terms of subsequent market direction. ''It’s noteworthy that the dollar remains bid despite the somewhat softer U.S. data recently and a more hawkish ECB,'' the analysts at Brown Brothers Harriman said, referring to last week's ECB meeting. 

The ECB delivered a hawkish hold Interest rates and the size of PEPP were all left unchanged.  However, the central bank announced that the pace of PEPP buying in Q4 will run at “a moderately lower pace” than in past quarters.  Some might regard this as a taper, but the size of the PEPP is left unchanged. 

The ECB's governor, Christine Lagarde, said that the “recalibration” was for the next three months, which suggests that if the recovery falters, the PEPP pace can be recalibrated again for Q1. The euro now depends on whether markets start to have more confidence in the eurozone recovery that would equate to the removal of accommodation, however incrementally. 

EUR/USD technical analysis

(Daily chart)

The price is looking to close the day negative and that leaves prospects of a retest of the lows for the sessions ahead. 

(Hourly chart)

From an hourly perspective, the bears can move in on the 50% mean reversion located near the neckline of the W-formation around 1.1790. Below there, the daily structure is located near 1.1780.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content

Recommended content

Editors’ Picks

EUR/USD stays below 0.9800 after US inflation data

EUR/USD stays below 0.9800 after US inflation data

EUR/USD continues to trade in negative territory below 0.9800 in the American session on Friday. The data from the US showed that the annual PCE inflation declined to 6.2% in August but the stronger-than-expected core reading didn't allow the pair to gain traction.


GBP/USD rebounds from daily lows, reclaims 1.1100

GBP/USD rebounds from daily lows, reclaims 1.1100

GBP/USD fell to a fresh daily low below 1.1030 but managed to reverse its direction and climbed above 1.1100 during the American trading hours on Friday. The pair remains on track to snap a two-week losing streak despite having suffered heavy losses earlier in the week.


Gold extends daily rally beyond $1,670

Gold extends daily rally beyond $1,670

Gold preserved its bullish momentum and rose above $1,670 after the mixed inflation data from the US on Friday. The benchmark 10-year yield is down more than 2% as markets look to wrap up the third quarter, fueling XAU/USD's daily rally. 

Gold News

Shiba Eternity download day the biggest bullish catalyst in SHIB history?

Shiba Eternity download day the biggest bullish catalyst in SHIB history?

Shytoshi Kusama, the project lead for Shiba Inu, has dropped a teaser about Shiba Eternity games for the SHIB community. Proponents expect the launch of the collectible card game to be a bullish catalyst for Shiba Inu price. 

Read more

SPDR S&P 500 ETF Trust (SPY) Forecast: We are teetering on the brink

SPDR S&P 500 ETF Trust (SPY) Forecast: We are teetering on the brink

Equity markets remain at the precipice of a technical collapse, which we examine in the weekly long-term chart below. The overall picture remains one of nervousness ahead of the upcoming Q3 earnings season.

Read more