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.

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

 

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