• EUR/USD climbs sharply by more than 1% due to a soft US dollar.
  • The energy crisis in the Euro area keeps the shared currency under pressure.
  • EUR/USD Price Analysis: Stills downward biased but subject to a mean reversion move towards 0.9800.

The EUR/USD bounces from two-decade lows reached during the European session, gaining some 1.34% in the day, spurred by an improvement in market sentiment and a weaker US dollar, despite the Fed’s hawkish rhetoric, opening the door for aggressive tightening by the end of the year.

The shared currency began trading nearby the day’s lows, just below the 0.9600 figure, and dived towards a fresh two-decade low at around 0.9538 before rallying sharply towards the daily high at 0.9726 before settling around current spot prices. At the time of writing, the EUR/USD is trading at 0.9722.

The energy crisis keeps the Eurozone under pressure. On Tuesday, news that the Nord Stream pipelines 1 and 2 showed leaks sent energy prices higher. Some countries’ officials said it could be sabotage, and even Danish PM Frederiksen said it was “hard to imagine that these are coincidences.” German officials expressed concern that a “targeted attack” had caused a sudden pressure loss.

Given the backdrop, Norway was looking to increase security around its infrastructure, according to Bloomberg.

Earlier, the EU’s economic calendar featured the GfK Consumer confidence, which tumbled to -42.5 heading into October, from a -36.8 September reading, well below analysts’ estimates. According to the GfK institute, improvement in consumer morale is closely tied to lowering inflation.

In the meantime, ECB officials have expressed the need for another 75 bps rate hike at its October meeting, led by ECB member Kazimir, Rehn, and uber-hawk Austria’s central bank governor Robert Holzmann.

Aside from this, the US economic docket featured US Pending Home Sales for August, which fell by seven months in a row, decreasing by 2%, exceeding the 1.5% contraction estimated. “The direction of mortgage rates -- upward or downward -- is the prime mover for home buying, and decade-high rates have deeply cut into contract signings,” Lawrence Yun, NAR’s chief economist, said.

Meanwhile, the Fed parade continues, with Atlanta’s Fed Bostic saying that the lack of progress in inflation means that the US central bank needs to get into restrictive territory, between 4.25 and 4.50%.

EUR/USD Price Analysis: Technical outlook

Given the fundamental backdrop, the EUR/USD remains downward biased, though recent price action suggests an upward correction is likely. Cementing the case is the Relative Strength Index (RSI) exiting oversold conditions, aiming upwards, crossing above its 7-day RSI’s SMA. Therefore, a test of the 0.9800 figure is on the cards, but the overall bias favors the greenback.

EUR/USD Key Technical Levels

EUR/USD

Overview
Today last price 0.9722
Today Daily Change 0.0108
Today Daily Change % 1.13
Today daily open 0.9594
 
Trends
Daily SMA20 0.9924
Daily SMA50 1.0056
Daily SMA100 1.0265
Daily SMA200 1.0679
 
Levels
Previous Daily High 0.9671
Previous Daily Low 0.9569
Previous Weekly High 1.0051
Previous Weekly Low 0.9668
Previous Monthly High 1.0369
Previous Monthly Low 0.9901
Daily Fibonacci 38.2% 0.9608
Daily Fibonacci 61.8% 0.9632
Daily Pivot Point S1 0.9552
Daily Pivot Point S2 0.951
Daily Pivot Point S3 0.945
Daily Pivot Point R1 0.9654
Daily Pivot Point R2 0.9713
Daily Pivot Point R3 0.9756

 

 

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