EUR/USD trims last week's losses, clings to 1.1600

The EUR/USD is advancing in the session, trading at 1.1619 up 0.20% during the day at the time of writing. As the New York session progresses, the market sentiment is downbeat, spurred by Evergrande's default to a US dollar bond-denominated with no grace period that halted transactions of their shares in the stock market. Further, inflationary pressures propel by an ongoing energy crisis are the drivers of the day.

Major US stock indices are slumping severely, between 1.26% and 2.51%, being the most affected, technologic shares.  In the meantime, the US Dollar Index (DXY), which measures the greenback's performance against a basket of six peers, is down 0.30%, sitting at 93.75.

Eurozone investor confidence dropped for the third month in a row

In the macroeconomic overview, investor confidence dropped severely in October, according to Sentix. The Eurozone Sentix Investor Confidence fell for the third consecutive month, from 19.6 to 16.9, well beneath the foreseen of  19. The report explained that signs of the global economy point to a mid-cycle slowdown, underpinned by the US. 

Across the pond, the US Census Bureau revealed that the Factory Orders for August rose by 1.2%, more than 0.9% foreseen by analysts. 

The market reaction to both reports was muted, as market sentiment is the main driver for the day.

EUR/USD Price Forecast: Technical outlook

The EUR/USD recent uptick printed a daily high at 1.1638, a heavy-confluence zone in the 4-hour chart. The 61.8% Fibo retracement of the 1.1689 – 1.1562 swing high/low and the R2 pivot point around 1.1630s level exerted downward pressure on the pair, spurring a retracement towards the current levels.

If the buyers want to regain control, they need a break above the 200-simple moving average (SMA) at 1.1664. a breach of that level would expose 1.1700.

On the other hand, if EUR/USD sellers want to resume the downtrend, a break below 1.1600 could pave the way for further losses. The first demand zone would be the 50-simple moving average at 1.1594, followed by the confluence of 2021 low and the S1 pivot level at 1.1667.

The Relative Strength Index is at 49, aiming lower, suggesting that the price could be subject to downward pressure, despite the EUR/USD upside bias triggered by a weaker US dollar.