EUR/USD to suffer a deeper dive amid fears about the debt ceiling and multiple energy issues

EUR/USD has hit the lowest since November 2020 despite a retreat of US yields. The pair is set to suffer further falls, according to FXStreet’s Analyst Yohay Elam.

There is room for more dollar strength

“US Treasury Secretary Janet Yellen told Congress that her department's extraordinary measures to prevent hitting the debt limit would be exhausted by October 18 – resulting in default and perhaps a financial crisis. As the clock ticks, markets worry.”

“Gas prices are surging all over the old continent and threaten to derail the recovery. While Europe's issue could be related to a desire by Russia's Gazprom to begin using the controversial NordStream 2 pipeline, energy problems are more widespread.” 

“China continues grappling with power outages that are disrupting the industry in the northeast. Delays in production could hobble global growth. Authorities in Beijing are taking steps to mitigate the problem, but fears are unlikely to subside soon.”

“Immediate support is at 1.1656, the daily low. It is followed by the all-important double-bottom of 1.1610 recorded last year.”

“Some resistance is at 1.1680, which was a swing low last week.”