EUR/USD nears 50-day EMA hurdle, stock plunge shock wearing off

The EUR/USD moved above 1.16 in Asia, but a break above 50-day EMA may remain elusive in Europe.
Stock plunge shock is wearing off as indicated by signs of stability in the USD/JPY, hence, the USD selling could stall.
Technically speaking, a move above 1.1630 would strengthen the bull grip.

Omkar Godbole FXStreet Contributor

The EUR/USD rose to a high of 1.1609 in Asia, as the risk aversion in the stock markets triggered a broad-based USD selling.

However, the currency pair may have a tough time scaling the 50-day exponential moving average (EMA) of 1.1611 as the markets seem to have digested the stock market sell-off. This is evident from the fact that the USD/JPY pair defended 112.00 in Asia and is now reporting moderate gains near 112.40.

Further, the S&P 500 futures are reporting 0.6 percent gains at the time of writing, meaning the risk assets could stabilize on the last trading day of the week, helping the USD regain some poise.

Also, the focus may shift to Italy now that the equity futures are showing signs of stability. The 10-year Itay-German yield spread currently stands at 305 basis points, the highest level since 2013. The EUR/USD may come under pressure if the spread rises further.

EUR/USD Technical Levels

Resistance: 1.1611 (50-day EMA), 1.1624 (50% Fib R of 1.1815/1.1432), 1.1676 (100-day EMA)

Support: 1.1583 (session low), 1.1563 (10-day EMA), 1.1526 (Sept. 9 low)

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M		Neutral	High
1H	Bullish	Overbought	Shrinking
4H	Bullish	Overbought	High
1D	Bearish	Neutral	Expanding
1W	Bearish	Neutral	Low
Updated Oct 12, 04:00 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

USD/JPY stays below 160.50 as markets assess BoJ decision

USD/JPY fluctuates in a relatively narrow range above 160.00 on Tuesday as markets assess the Bank of Japan's (BoJ) decision to raise the policy rate by 25 at the June meeting. Meanwhile, investors keep a close eye on news coming out of the Middle East, while preparing for the critical Fed meeting.

AUD/USD trades in tight channel near 0.7050 despite hawkish RBA message

AUD/USD trades modestly lower on the day at around 0.7050 on Tuesday as markets adopt a cautious stance amid a lack of details surrounding the US-Iran peace agreement. The Reserve Bank of Australia (RBA) left the door open for possible policy tightening after leaving the interest rate unchanged, as expected, at the June meeting but failed to boost the Australian Dollar.

Gold trims gains, approaches $4,300

Gold now surrenders part of its initial advance and recedes to the vicinity of the $4,350 mark per troy ounce on Tuesday. The early enthusiasm sparked by the US-Iran peace deal has faded somewhat, prompting investors to adopt a more prudent stance as they await further details of the agreement and key guidance from the Fed.

Why a hawkish RBA is no longer enough to lift the Australian Dollar

The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it.

BoJ just hiked and US-Iran deal is on the table: Why Japanese Yen is still around 160.00

The Bank of Japan lifted interest rates from 0.75% to 1.00%, its highest level in more than three decades. The landmark move aims to stabilize a sharply weakening Japanese Yen, but by looking at the immediate market reaction, it doesn’t look like it’s going to work.

Why a hawkish RBA is no longer enough to lift the Australian Dollar

The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it, focusing instead on slowing economic growth and proving that central bank messaging alone isn’t always enough to drive currencies.